In August 2013, the Treasury Department through its Treasury International Capital data (TIC) put a scale on that summer’s disruption. With a two month delay, the TIC figures gave us some insight as to why the fixed income/MBS selloff that summer was so violent; and further why it had so easily spread to currency markets. The destabilization of that event [...]
There isn’t a whole lot known about the Federal Reserve’s Foreign Reverse Repo accommodation, and I believe that is intentional. The rate which the Fed pays to “borrow cash” from foreign central banks and governments is unknown. What is known is just how much in total the Fed is “accommodating” foreign dollar business. This RRP, in sharp contrast to the [...]
Goldman Sachs did not disappoint. The bank’s earnings for Q1 were a disaster slightly worse than what was already anticipated as beyond bad. There was nothing that the firm did that it can say it did well, as Goldman’s CEO admitted there was weakness or “headwinds across virtually every one of our businesses.” For eurodollar or wholesale banks, that has [...]
On April 12, Muhammadu Buhari, President of Nigeria, was in Beijing to negotiate Chinese aid for his ailing country. At home, the government faces an enormous budget deficit largely on the price of oil. The more immediate threat, however, is that Nigeria in large part due to oil prices is being squeezed by monetary shortage. The country is an import-heavy [...]
The “first” part of the TIC data update for January was relatively straightforward, especially since the scale of the net transaction adjustments in both December and January really did match what happened in January (crossing into February). The Treasury Department’s estimate for foreign holdings of US dollar assets were nothing short of remarkable in all the ways that were expected [...]
In the summer of 2014, repo fails suddenly surged out of nowhere. Between the events of the violent taper selloff in June 2013 and the first half of 2014, fails had been particularly calm if somewhat gently rising as the trend had it dating back to the QE’s. It had become common to find total fails (meaning both “to receive” [...]
There is an ongoing mess in repo markets and not a lot of straightforward commentary about it. As usual, whenever any repo tenor trades highly special we hear only about the persistence and plethora of shorts betting on rate normalization. Since rates, overall, have done only the opposite going back to June 2014 and the start of this repo mess [...]
It has become cliché that commentary continues toward the increasingly absurd at the expense of the obvious and all because Janet Yellen says there can’t possibly be anything wrong. The degree to which the broader markets agree in that sense has certainly lessened of late, but that only suggests the increasingly bizarre platitudes offered to do anything other than confirm [...]
If the world is poised upon the precipice of “deflation” and the ugly economic consequences of reduced “money supply”, at the middle of all that are the primary dealers – still. While it is technically correct to claim that the Fed expanded its balance sheet to $4.5 trillion, with $2.4 trillion left after autonomous factors for bank “reserves”, that actually [...]
You simply cannot act as a money dealer when the money you are dealing is highly suspect. I am not writing about money in the true sense, such as any tangible form that falls under property laws of custody and bailment, but rather the wholesale “money” that is derived under the much looser and unconstrained terms of financial laws and [...]
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