When the People’s Republic of China (PROC) was granted full UN status in 1971, everything was then set in motion. The successor to Chaing Kai-shek’s nationalist government in the Republic of China (ROC, or what we call today Taiwan) was originally granted as a founding member and one of five Security Council seats. UN General Assembly Resolution 2758 instead recognized [...]
There are four basic categories to the PBOC’s balance sheet, two each on the asset and liability sides of the ledger. The latter is the money side, composed mainly of actual, physical currency and the ledger balances of bank reserves. Opposing them is forex assets in possession of the central bank and everything else denominated in RMB. Because liabilities need [...]
Suddenly central banks are mesmerized by yield curves. One of the jokes around this place is that economists just don’t get the bond market. If it was only a joke. Alan Greenspan’s “conundrum” more than a decade ago wasn’t the end of the matter but merely the beginning. After spending almost the entire time in between then and now on [...]
Chinese officials earlier this month broadcast they were ready to buy US Treasury bonds again. After selling an unknown quantity (there are different figures, none of which exactly agree) over the past few years, the announcement was clearly aimed at China’s exchange rate. Officials have taken to CNY stability as a central focus of official policy, to the detriment even [...]
On March 24, 2009, then US President Barack Obama gave a prime time televised press conference whose subject was quite obviously the economy and markets. The US and global economy was at that moment trying to work through the worst conditions since the 1930’s and nobody really had any idea what that would mean. As President, Obama’s main task was [...]
As we move past all the calendar effects pressed to the front of each year, some trends are starting to come into view. Not only are there trends but a few round numbers, even. The Chinese monetary system is one that is predicated on “dollars”; not all in dollar-denominated assets, but the type of foreign reserves that are consistent with [...]
Earlier this month, China’s State Administration of Foreign Exchange (SAFE) reported a large increase in official reserve holdings. The biggest “inflows” in several years has, as you would expect, led to much optimistic commentary suggesting if not outright stating that the currency problems are no more. It is not the first time such claims have been made, as this has [...]
What was it that touched off CNY’s devaluation in the first place? When it started, “unexpectedly” of course, it was described as intentional policy designed to thwart speculators betting too heavily on the currency’s continued rise. But the first major move in the chess game between the PBOC and “whatever” it is driving the currency was to widen the daily [...]
According to the headline TIC statistics, foreign central banks have in the past six months sold the fewest UST’s since the 6-month period ended November 2015. That may indicate an easing of “dollar” pressure in the private markets due to “reflation” sentiment. They are, however, still selling. In February 2017, the latest month available, the foreign official sector disposed of [...]
It is understandable why everyone is right now fixated on Washington. The repeal, or not, of Obamacare is, to paraphrase former Vice President Biden, a big deal. In terms of market expectations, it is difficult to discern by how much. That was to be, after all, but one step of several reductions to the administrative burden on the economy. Maybe [...]
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