If the groundhog can tell us the length of winter by simply appreciating his own shadow, China’s central bank can perform something of a similar exercise and interpretation about the global eurodollar condition. The panic response of the PBOC is to immediately peg its currency, CNY, whenever a global monetary storm of sufficient fury arrives. Thus, if the PBOC sees [...]
Nothing says “fixed” quite like bureaucrats responding to a past crisis they did not foresee (and in the case of European bureaucrats, actively denied while it was happening) by establishing more layers of bureaucracies to “prevent” it from happening again. It is the most predictable result in all of finance and money as the government acting so busily to assure [...]
The Office of the Comptroller of the Currency won’t release its collection of bank call reporting for Q3 2016 until January. There is a great deal about the aggregate US bank derivative book in that particular quarter that is of particular interest. Though we will have to wait for that update, there is still some value in reviewing parts of [...]
The Chinese have been undergoing quite a bit of stress lately, with markets including stocks more likely to be in turmoil than not. In fixed income, the Finance Ministry was slightly shaken by a failed auction today, its first since summer 2015. Yesterday, government bond futures trading had to be suspended when the 10s and 5s experienced their largest drop [...]
In September 2013, the BIS took a closer look at offshore corporate issuance of EM obligors. The timing could not have been more relevant, which was very likely their point in undertaking the difficult exercise. The “taper tantrum” that summer had roiled domestic bond markets in the US, but was really focused in the offshore sections of the “dollar” system. [...]
It is often very difficult not to smile even though there is little lately to smile about. Every so often the world produces an absurdity that proves yet again God has a sense of humor, or that cosmic irony is a real thing. In economics and finance, all of the past few decades have revolved around actual money, which has [...]
On January 10, the South African rand crashed about 9% in just a matter of minutes. It was the largest move for the currency since October 2008, an ominous yet poignant sign of just how bad everything was globally at that time. CNY had been pummeled up until the PBOC acted but a few days before. Even though the world [...]
If I was forced to guess what it was that specifically set off this “something” of growing “dollar” illiquidity since July, I would have to go back to the July 28 and 29 BoJ policy meeting. Initially, that was the decision that so disappointed at least against the backdrop of expectations of maybe the “helicopter.” But while the mainstream saw [...]
When Alan Greenspan raised rates more than a decade ago, he just commanded that they be raised and the markets dutifully obeyed. The myth was unchallenged that the Fed could, if it wished, flood the market with bank reserves to reduce rates or contrarily starve it of reserves to raise them. The events of 2007-09 were essentially direct defiance to [...]
It is never a good thing when official sources either named or unnamed are quoted in the media as denying bailout discussions. For any bank such rumors and denials are harmful because, obviously, they are a reflection of common perception. Furthermore, most people know all-too-well the true nature of any denials, thus reinforcing only that much more the troubling perceptions [...]
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