With the state of the “dollar” being what it is, including the devastating darkening afforded by negative swap spreads everywhere, it isn’t exactly surprising to find that primary dealers continue to hoard UST collateral. By September, dealers were reporting a net positive balance of all coupon holdings of nearly $60 billion. With everyone in the world predicting higher interest rates, [...]
If for the Asian “dollar”, then China’s inability to place an economic bottom is a problem for every market and economy. The more hopeful mainstream rhetoric from the summer is now gone, just as the “dollar” would have it. China’s variations have far too closely matched these “dollar” waves which, in the midst of another, is not a hopeful sign [...]
Being September 15 and thus entering the final two weeks of the quarter, it seems appropriate to review all the liquidity bottlenecks (or at least the symptoms of them). Since GC repo rates found themselves retracing the end of Q1 at the end of Q2, it feels appropriate to start there. As you might expect, the repo rates thus far [...]
When grounded in the framework of traditional banking, wholesale dynamics can be quite confusing to the point of being impenetrable. Nowhere is that more the case than the wholesale ideas of currency and what counts for establishing chains of traded liabilities. In the traditional banking/monetary framework, everything is reducible to money; all else are just derivative claims on it. The [...]
With stocks selling off at least in morning trading, everyone is back asking “is it over” after last week supposedly quelled so much surface disquiet. The rebound in oil prices has been robust and a broad survey of “dollar” proxies indicated that the hugely negative run from August has relented. The notable exception to that trend has been Brazil and [...]
Going all the way back to before last year’s Jackson Hole conclave, it was clear that there was inordinate trouble in the economy and global markets even though the central focus then was on how quickly to “normalize” everything and anything. The economy was assumed unassailably terrific and markets only reinforced that idea. The problem then, as now, was that [...]
Just a couple of noteworthy prices/developments around the close: 1. Repo rates have come back down, with the GC rates yesterday below IOER for the first time in 16 trading sessions (MBS). Volume in MBS has been quite light recently, with UST volume making up the difference. I can’t see any particular reason for such a marginal shift except the [...]
It was, apparently, just a one-day “dollar” reprieve for the crude complex as oil prices are pounded today across the board even after the FOMC statement (leak) release. Unsurprisingly, copper joined the depression as the September futures price traded as low as $2.2605 this morning ($2.273 as of this writing). That is, of course, a new cycle low in copper [...]
The S&P/LSTA Leveraged Loan 100 was updated this weekend through August 13, confirming that market values in those “liquid” names fell below the December 16 levels for the worst prices since before QE3. There isn’t any further information on the reasons for the delay, though revisions to the BofAML High Yield indices suggest an answer. On Friday, the CCC and [...]
Not that we needed another reminder about liquidity, but the GC repo rate (indexed) for MBS on August 12 was just posted at 30.7 bps. That is the highest non-quarter or month-end rate since just before QE4 in December 2012. The UST repo rate, as well as the agency rate, was of similar proportions and comparisons at just under 30 [...]
Stay In Touch