Apparently the stasis that has infected credit markets has been visited upon gold prices. Going back to late March, gold has straddled the $1,300 level without straying too far on either side. As with other credit market prices, such stability is conspicuously different from what would be considered “normal” market behavior. Is it possible the two opposing forces affecting gold [...]
There was nothing surprising in Federal Reserve Chairman Janet Yellen’s press conference yesterday. While some “investors” may have been shocked about where policy was headed, some parts of the credit markets have been anticipating this course right along (more on that later). Whatever may be expectations for QE and “forward guidance”, the FOMC is using the unemployment rate to provide [...]
The core of 2014 Chinese defaults is really about control, as it ever is in 21st century finance. Central banks believe they have it and can exercise it with precision, a mysticism that is accepted widely by market participants. In allowing smaller firms to default, they are sending the signal that they want greater order in what is near-universally recognized [...]
So far in China this year there have been defaults and “bailouts” in the credit markets, but they are tiny in relative comparison to everything else. That they have occurred at all is why they have grabbed so much attention. We all have some inkling of the credit and monetary inequities that are roiling inside the Chinese economic gut, but [...]
Despite now two doses of QE taper and much more confirmation that the FOMC will be committed to that course, gold prices have not collapsed. Conventional wisdom has been uniform in believing QE as inflationary, and thus a positive for gold prices (despite the trajectory since 2011). Removal of QE should have been, if this thinking is correct, a negative [...]
It is exceedingly difficult to interpret the data in any other manner. That is bolstered greatly by reality of the post-taper environment, where issuance has declined dramatically. Yet, it was the talk of taper originally that set that decline in motion, echoing the feedback effects of this “extraordinary” monetary intrusion. Since Bernanke’s QE3 promise back in September 2012, repo volumes [...]
While I would love to be talking about the Buffalo Bills in the AFC Championship game, or at least the addition of some kind of competency in some form (any) for the team, this post is dedicated instead to the newest mechanics in treasury bills. The most recent 4-week bill auction went off at 0.0%, in a string of zero [...]
As gold established price behavior based on forward rate movements in 2013, it is clear that the ebb of each successive wave of collateral selling was met with less intensity on the price upswing. There are a number of reasons for that, including the price volatility on the downside and central banks conspiring to convince markets that “tail risks” are [...]
As per usual, gold prices followed forward rate movements. GOFO is again negative out to 2-months and is hinting negative for the 3-month rate. The 6-month forward rate is moving uite a bit lower, and even out to 1-year there has been a few bp drop in the rate. Bottom line: collateral issues abate; physical shortage reappears. In truth, the [...]
On Monday, September 9, there was a computer-related glitch in the US Treasury’s auction system that for some as yet unexplained reason did not allocate any of the 3-month bill issue to Goldman Sachs. The treasury made up for that by over-allocating in the 6-month issue, thus creating some pricing anomalies that caused a minor stir in repo and collateral [...]
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