Market & Economic Analysis

"Study the past if you would devine the future." - Confucius

Federal Reserve’s Own Inflation Expectations Surveys More Agree w/Euro$ Futures Inversion Than Rate Hikes

The FOMC is going to hike rates maybe even aggressively. There’s not much dispute on this assumption. Why the Committee might be doing so, that’s a whole detailed debate. The Treasury yield curve is building toward inversion while the crucial (and leading) Euro$ futures curve is already substantially upside down.Both are increasingly confident market bets against the FOMC’s position(s).Jay Powell [...]

By |2022-02-14T19:14:27-05:00February 14th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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Major Euro$ Curve Developments (also not clickbait)

I’ve said since it first showed up on December 1 to keep the eurodollar futures curve in the back of your mind. It wasn’t likely to change all that much in its first stage of minor inversion. The mere fact it had gone upside down at all regardless of where on the curve or by how much was already a [...]

By |2022-02-14T17:47:17-05:00February 14th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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Transmission of (euro)Dollar Disease Back Through Beijing To The Rest Of The World

Everyone was really confused. China was the unstoppable monster, the economic powerhouse that had quite easily, it seemed, survived the Great “Recession” with barely a scratch. Its ascent to the dominant world position had been written long ago in stone, carved macro graffiti left in place especially as the so-called developed world struggled mightily after 2009.The Chinese were widely thought [...]

By |2022-02-11T19:43:23-05:00February 11th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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Setting Up To Repeat The Policy-Error Error

The way it was told, the US and worldwide economy in 2017 and for most of 2018 was absolutely on fire. Booming. They even came up with a name for it, calling the period “globally synchronized growth.” This was so good it was, everyone claimed, in danger of becoming too good. Inflation.To stay ahead of that monster, to keep the [...]

By |2022-02-11T17:58:58-05:00February 11th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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Sky High CPI and the Surging Conflict of Interest (rates)

NOTE: This post was written on Thursday, February 10. This isn’t typical. Both the speed at which this has come about and the depth to which the it has now sunk, the yield curve’s wild flattening is simply breathtaking. Today’s accelerating CPI print accelerated the distortions all over the Treasury market such that it has taken a shape along key [...]

By |2022-02-11T13:25:50-05:00February 11th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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China’s Total Dollar Equation: CNY minus Trade Flows equals Some Sense of the Euro$ Problem?

In the earliest days of the eurodollar, its purpose was primarily as a global reserve medium to intermediate and finance trade. To surmount Triffin’s Paradox, this ledger system arose as demand for the reserve currency outstripped the Bretton Woods arrangement’s ability to supply it (because it was constrained by US gold reserves). Rebuilding first from WWII and then an explosion [...]

By |2022-02-09T19:13:51-05:00February 9th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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Rate Hikes and ‘Inflation’ Sizzle, But Where’s QE’s Beef?

As a follow-up to the post-October correlation in Treasuries, it’s worth reiterating how much more compelling the flattening curve has been given the full range of circumstances otherwise all lined up directly opposed to it. There has been: 1. Accelerating CPI.2. Higher oil prices.3. Looming rate hikes.4. Outwardly favorable labor data turbocharging expectations for even more aggressive rate hikes (and [...]

By |2022-02-07T19:43:15-05:00February 7th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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From Container Prices To Inflation Expectations And The Yield Curve, They All Dwell On October

This thing, this massive supply disruption is a perfect example of a positive feedback loop. It began with government (over)reaction to COVID, as noted here impacting both supply and demand. Those two curves have behaved in classic fashion, inelastic supply unable to efficiently respond to an artificial outward shift in demand. The resulting impact price-wise as pure economics (small “e”).A [...]

By |2022-02-07T18:44:00-05:00February 7th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|
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Weekly Market Pulse: Are You Diversified?

There were some wild, unprecedented - frankly stunning - swings in some very large, high-profile stocks last week. The press concentrated on Meta, nee Facebook, and Amazon as the yin and yang, the negative and positive, of the market. Facebook (how long before Zuckerberg abandons Meta? I give it a year) managed to lose a quarter of a trillion dollars [...]

By |2022-02-07T01:27:18-05:00February 6th, 2022|Alhambra Research, Bonds, Commodities, Currencies, Markets, Real Estate, Stocks|
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