On June 13, the day the eurodollar futures curve inverted, Federal Reserve Chairman Jerome Powell was at his regularly scheduled press conference following the regularly scheduled FOMC meeting. Nobody asked him about eurodollar futures, of course, because why bring that up? The press did inquire about IOER, though. The Fed had decided to make a “technical adjustment” in its policy [...]
Deutsche Bank wasn’t the only global institution under the gun of the US Justice Department. While the German bank settled for a record fine earlier this year, RBS was also hit. Theirs was an eye popping $4.9 billion settlement. The ostensibly British bank had already set aside $3.4 billion for the anticipated civil penalty, meaning that only $1.4 billion (and [...]
It’s been a few years since Japan’s top central banker has been invited to Jackson Hole. The Kansas City branch of the Federal Reserve is today hosting the opening of its annual symposium. Typically, the introduction is given by the President of the KC Fed and then opening remarks from whomever is Chairman of the FOMC. Outside of those, the [...]
At this particular juncture eight months into 2018, the only thing that will help is abrupt and serious acceleration. On this side of May 29, it is way past time for it to get real. The global economy either synchronizes in a major, unambiguous breakout or markets retrench even more. That’s been the basis of this thing from Day 1; [...]
The FOMC statement for the July-August 2018 policy meeting exceeded expectations once more. It’s difficult for the Committee to continually do this since the whole point of these things is to downplay all expectations. The goal is to make everything seem boring and uninteresting, if the Federal Reserve is doing its job. But they are always interesting because nothing over [...]
July 2018 was another disappointing month in the housing market. Sales of existing homes, according to the National Association of Realtors (NAR), declined again last month. At a seasonally-adjusted annual rate of 5.34 million, it was the lowest level of resales in two years. Apart from the distortions last year in the aftermath of the big Gulf Coast storms, the [...]
I suppose it’s only fair. After all, they started it. Earlier in the year, Federal Reserve officials including Chairman Jay Powell suggested it was all Trump’s fault. The abrupt difficulties presented by the dollar were, they said, the result of tax cuts swelling the deficit and thereby threatening capital markets with a “deluge” of Treasury bills to digest. This past [...]
What is it that’s different in August? If there was some relative calm in global markets in June and July it certainly disappeared this month. The dollar shot higher and global liquidity indications began sinking again. Yields have fallen on safety (liquidity) instruments more apparently divorced from any other mainstream factors. One place to look for answers is Tokyo. I [...]
It’s not that curves are flattening. It’s where they are. There’s really no mystery surrounding any of this. The “conundrum” arrives only when starting from the orthodox perspective; the one derived from Economists even though they don’t understand the bond market in the slightest. Short-term rates tend to “obey” central bank signals because central banks offer more direct money alternatives. [...]
There isn’t really any doubt what happened on May 29. It was a global collateral call. Bonds all over Earth were hugely bid, especially paper in Germany and America – the pristine of the pristine. This is pure liquidity risk, meaning that no matter your feelings on the long-term solvency of the US government (or Germany’s ability to maintain the [...]
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