The US economy is supposed to be nothing like its Chinese counterpart, a sentiment that extends in the mainstream well past that into genuine surprise about how it would be possible US financial markets tripping over Chinese stumbles. Though the US might be fighting, too, a manufacturing slump that looks more like recession every day, convention still holds that the [...]
You almost have to marvel at the resilience shown in leveraged loan pricing over the past nearly month. Prior to the Fed’s rate decision on December 16, the leveraged loan market, as with the rest of the junk bubble, was sinking fast and furiously. Since then, however, despite great financial turmoil all over the world, and even in the places [...]
Chinese exports in December were better than feared, declining by just 1.4% against some expectations for an 8% decline. However, there were significant questions in the data, starting with year-end contract projections, unverified accounts that don’t match other countries’ trade figures and the return of Hong Kong as a potential falsification point. As ZeroHedge points out, without the huge jump [...]
Behind our new paywall, I have been documenting the behavior of “dollar” money markets as they relate to China and elsewhere (global, general liquidity) but recent data in repo demand a more open airing. There are numerous indications that US$ markets are a total mess, none more so than repo. That starts with GC repo rates that remain above the [...]
The fallout in liquidity and funding markets (subscription required) has been mostly suggested at the junk bond bubble. Prices have fallen, and many precipitously, while yields have risen. But those are not the only negative factors being exhibited. If the issuance figures are anywhere close to correct, then increasingly junk obligors are being totally shut out at any price. Worse [...]
You can kind of get a feel for where we are by days like today. In the morning, a foreign central bank in almost grand standing (for now) is obliged to crash a money market of its own making and the world responds, initially, by cheerful enthusiasm. As O/N HIBOR was making its way up to 66%, oil prices (February [...]
If the PBOC was desperate last week, the catalog of words describing their likely stance this week is unbelievably short (pun intended). In the handbook of central bank operations, when conditions truly spiral out of control the first entry in that chapter says to blame speculators. Primary among them, subchapter one in the handbook, are the short sellers. If you [...]
When analyzing the full and true nature of the dissonance between the idea of continued recovery and the financial markets’ scenario for something much worse you realize that this is not a new occurrence. In curve after curve, negativity has been building for years. Financial curves are important because they tell us the health of the monetary economy, namely assumptions [...]
The PBOC wasted no time this week showing that it was serious about its desperation last week. The central bank fixed the CNY reference contrarily upward to 6.583 this morning from Friday’s 6.600. As we have been documenting during this unabated “dollar” problem, whenever the PBOC attempts a contrary maneuver with the fix it typically sets off enormous fireworks. Sure [...]
Throughout October, the S&P 500 Index (IVV) rebounded remarkably from the lows made in late August, breaking above both moving averages and getting close to new all-time highs. After a volatile but stagnant final two months of the year, in which the market straddled the moving averages with no clear direction, the index once again broke down in the last week, and [...]
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