Normally the lack of volatility in "markets" would be a welcome event. Stability is something to be courted not disbarred and exiled. Sure, the big banks will make noise about how they can't "make money" in such an environment (as they are right now about credit markets) but that will only force them to find something more productive to do [...]
Unfortunately, the SOMA details for the week ended April 23 show no Open Market purchases of any TIPS. I say that is unfortunate because it would have provided an easy answer to the breakevens mystery I noted on Wednesday. As it is, the 5-year breakevens remain elevated on apparently well-bid 5-year TIPS. Swap spreads have decompressed almost fully in the [...]
In more typical climates you would come to believe that a decided lack of volatility in credit markets would be welcomed as an unmitigated positive. Credit is not supposed to be beset by whirlwinds from the political world, reflecting a more traditional paradigm when banks were simply custodial agents rather than proprietary hedge funds. The banking system was never supposed [...]
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