In parallel to US$ credit markets, the “dollar” itself found a new and worsened degree of “tightness” right around December 1. The trend that was already in place, doing so much damage globally prior to about Thanksgiving, took another upward turn at the same time US credit markets may have completely given up on the dominant economic story. In other [...]
After months of hearing about how the fracking “miracle” is totally, fully and comprehensively responsible for the drop in oil prices there is finally penetrating reality. After the continued disruption in the Chinese economy as well as the close onset of recession in Europe, plus full-blown recession in Japan and Brazil, all that is left is really the diminutive hope [...]
The growing sense of an economic cliff is based on three major factors, all of them in massive markets as opposed to manipulated and ill-suited statistics. The most obvious are oil prices and the UST curve (and related curve mechanics) as they have turned to prices and shapes not seen since the worst of the last crisis. The third, “dollar” [...]
WTI is trading below $64 this afternoon and the long end of the UST curve is being bid rather starkly, the 30-year has dropped below 2.90%, there is an important element to consider about such “price discovery.” As my colleague Doug Terry points out, a 40% drop in oil prices is no longer strictly a matter of finance. In other [...]
The re-emergence of “tight” dollar “supply” has created much the same problems as had been seen prior to October. That means the usual places exhibit duress to varying degrees. What I don’t think is really appreciated is how this year’s episode is transformative toward a different set “ruling” the global dollar short. In one sense, it is not surprising to [...]
Despite all domestic reports to the contrary, the rest of the world is having a very difficult time seeing any recovery yet in the United States economy. With recent trade data in hand, it is not difficult to discern why oil prices are heading so much lower and the Chinese (and then Brazil and every other resource economy) are left [...]
It began more than a week before the FOMC meeting, as eurodollars again anticipated what the mood would be surrounding whatever the FOMC might say. “Dollar” conditions had run down significantly where the entire curve shifted lower (looser) for the first two weeks of October as doubts grew about the economy in the US and pretty much everywhere else. Right [...]
While this morning’s post was more about longer-term implications of “dollar” changes, there are a couple of observations pertinent to the shorter-term that I think need consideration too. For whatever reason, whether it was, like September 4, 2013, an anticipation of countertrend “dovishness” on the part of the FOMC, the eurodollar market gained a sudden appreciation of the economic downside [...]
Terminology and semantics have an important place in communication because we want to convey concise and accurate meaning as efficiently as possible. That is why I disdain the term “petrodollar” when speaking or writing about the global exchange standard that replaced gold in the Bretton Woods sense. The idea of a “petrodollar” conveys some of the “right” characteristics but leaves [...]
After enduring quite a bit of restlessness even into the early part of 2014, the Banco do Brasil (Brazil’s central bank) believed it had regained order in its currency “market.” Going back to the dramatic and global tightening episode around Chairman Bernanke’s taper threats in the middle of 2013, the real was caught in a very dramatic downdraft that has [...]
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