The FOMC continues to test out its exit strategies in a determined effort to try to gain a somewhat hard and durable floor under interbank rates. To this point, there hasn’t been any sign of any effect whatsoever. That would include the apparently semi-permanent state in which US$ repo persists under heavy fails. This negative condition is supposed to be [...]
It is Tuesday which only means that whatever oil trading takes place today will be easily overwhelmed by whatever interpretation about inventory levels released tomorrow dominates. However, the last week has been interesting in the respect of a shift in the behavior of the futures curve for WTI. Up until then, almost all volatility was concentrated in the front months, [...]
The Federal Reserve is running another large-scale test on its Term Deposit Facility (TDF), the account by which it intends to establish a European-style floor to its also intended interest rate corridor. Judging by the fact that nobody has paid any attention to this test or the one that preceded it, except for those that were fooled into thinking the [...]
I’ve had my suspicions for some time that December saw a(n) (il)liquidity event throughout the “dollar” system. The problem with that supposition is the lack of corroborating price action in riskier markets where you would expect the most impact. That was the pattern revealed by the end of the last event on October 15, where risky credit, especially corporate junk [...]
Oh Europe. I have a growing sense that US credit markets are repeating the leadup to last October 15, though there isn’t any obvious expression of any such illiquidity (at the moment). For one thing, the eurodollar curve has taken the FOMC’s bluffs in complete stride, in fact doing the exact opposite as you would expect of a very close [...]
The growing sense of an economic cliff is based on three major factors, all of them in massive markets as opposed to manipulated and ill-suited statistics. The most obvious are oil prices and the UST curve (and related curve mechanics) as they have turned to prices and shapes not seen since the worst of the last crisis. The third, “dollar” [...]
As the Eurozone absorbs yet another economic blow, the urge to engage in even more historic debasement via the ECB has heightened, to say the least. The talk about a European “QE” is near endless, as that is about all that is left for them to do. That is itself a powerful statement, lost upon those that are calling for [...]
The problem with being long gold, or even a fan of gold as anathema to central bank “flexibility” in central planning, is that you are often reminded the messiness of its modern nature. Gold as money, properly understood, meant money as property which is why physical metal fit so well for maybe all of “civilized” human history. However, the unassailable [...]
“We don’t exactly know how it will work” should be stamped upon every message coming from the policymaking apparatus from this point forward, and then retroactively applied to every message in the age of risk and rate repression. Action in short-term money markets has heated up yet again, and that is not a positive statement toward vital function. To “exit” [...]
Since we are now in the middle of the final month of a quarter, checking repo stats shows what we have come to expect of a fragile liquidity system. Once again, repo fails spiked sharply in the latest weekly statistics from FRBNY as primary dealers and the Fed’s own repo “fix” fail to affect the “resiliency” that FOMC members appear [...]
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