It’s not just the 4-week T-bill rate which is defying the Fed’s illusion of control, though that’s where the incidents are most evident. The front bill is nowhere close to the official RRP “floor” which can only mean one thing: collateral shortage, a large and persistent liquidity premium. Therefore, the further under said floor, the more the competition for the [...]
Wow, what an incredible day across the entire marketplace. And by incredible I mean nothing good at all. Predictable, though. All the warning signs and warned-about fragilities playing out as expected, escalation up and down each curve or equity index. To start with, I still don’t really know where the bills are right now! That it is even a question [...]
The 2-year Treasury right now is the key point, the spot on the yield curve which is influenced mostly by potential alternative rates including those offered by the Federal Reserve. Because of this, the market for the 2s is looking forward at what those alternate rates are likely to be, then pricing yields accordingly. Since the FOMC sets those alternative [...]
You might not know it, but front-end T-bill yields are not the only market spaces which are making a mockery of the Federal Reserve’s “floor.” There are others, including the same money number the same Fed demanded the world (or whatever banks in its jurisdiction it could threaten) ditch LIBOR over. Yes, SOFR.I’ve repeatedly highlighted the 4-week Treasury bill simply [...]
There was still another scramble for collateral yet again this morning. Nowhere near the intensity and duration of yesterday’s more massive flux, still it was obvious enough even if of the less egregious kind to only stick around for a little over an hour. Beginning at the European open (a place where recession signals are outright compounding), the 4-week bill [...]
Yesterday’s market “volatility” spilled (way) over into this morning’s trading. It ended up being a very striking example, perhaps the clearest and most alarming yet, of a scramble for collateral. The 4-week T-bill, well, the chart speaks for itself:During past scrambles, such as those last year, they didn’t look like this. They would hit, stick around for an hour, maybe [...]
The bond market is allegedly populated by the “smart” set, whereas those trading equities derided as the “dumb” money (not without some truth). I often wonder if it’s either/or. The fixed income system just went through this scarcely three years ago, yet all signs and evidence point to another repeat. So, how smart can Eurobond agents really be if they’ve [...]
The US$ continues on its rampage, particularly zeroed in on China for simple if misunderstood reasons (that have nothing to do with “devaluation”). What about the rest of the marketplace, the other stuff which identifies the eurodollar’s various cycles? You know about T-bills, which, yet again today, are more like what the dollar is suggesting. Other than those, what’s the [...]
As a preface to this update ostensibly on Europe, it’s all really about Euro$ #5 sadly rounding into form. In this first part, I’m going to have resurrect the quotation marks surrounding the term “rate hikes”, or bring back RHINO (rate hikes in name only) given what’s going on in Treasury bills.Not rate hikes, or enough of them. Our dead [...]
It’s never just one thing or another. Take, for example, collateral scarcity. By itself, it’s already a problem but it may not be enough to bring the whole system to reverse. A good illustration would be 2017. Throughout that whole year, T-bill rates (4-week, in particular) kept indicating this very shortfall, especially the repeated instances when equivalent bill yields would [...]
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