There were all kinds of good news in the August payroll report. The Bureau of Labor Statistics would publish an acceleration in headline numbers, just about every one of them. The Establishment Survey “surged”, wage growth registered its largest annual increase in nearly a decade, while one broad measure of slack, U-6, tumbled to its lowest point since the start [...]
So, the eurodollar curve has inverted. Bad news. Now what? While this is a major milestone in the monetary system’s decidedly anti-inflation/growth journey, it is hardly the end point of it. On the contrary, though it takes a lot of negative, deflationary potential to distort the curve in this way, we need to see if the market sticks with that [...]
Stop me if you’ve heard this before: dollar up for reasons no one can explain; yield curve flattening dramatically resisting the BOND ROUT!!! everyone has said is inevitable; a very hawkish Fed increasingly certain about inflation risks; then, the eurodollar curve inverts which blasts Jay Powell’s dreamland in favor of the proper interpretation, deflation, of those first two. Twenty-eighteen, right? [...]
Have hedge funds acted rashly, perhaps stupidly? There is a segment of the population media that very much wants people to think so. According to recent data, fund speculators have gone long short-term US Treasuries, particularly the 2-year (as well as eurodollar futures), since early October. And not just long the short end, the most in almost seven years!What idiots, [...]
Why always round numbers? Monetary policy targets in the post-Volcker era always change on even terms. Alan Greenspan had his quarter-point fed funds moves. Ben Bernanke faced with crisis would auction $25 billion via TAF. QE’s are done in even numbers, either total purchases or their monthly pace.This is a messy and dynamic environment, in which the economy operates out [...]
Go early and go fast. This was the message FOMC Governor Christopher Waller wanted to send to the CNBC audience watching his interview yesterday on that channel. He was referring to the possible taper of QE6. In Waller’s view, if the US economy lives up to its current hype in the form of two more blowout jobs numbers, those would [...]
Quirks or kinks in the eurodollar futures curve are nothing new, materializing from time to time as much for technical reasons as anything else. Still, there are those instances – such as June 2018 – when these represent meaningful changes in outlook and condition. Back in the middle of that year, the sudden inversion in the curve along the 2020-21 [...]
It wasn’t all that long ago when the media began to fill itself up with one story after another about how huge looming inflationary pressures were causing the entire “market” to rethink its lengthy and determined anti-reflationary stance. Back in March, for instance, S&P had joined this chorus by zeroing in on eurodollar futures, of all instruments, and coming back [...]
Deconstructing long-term interests may seem like a purely academic exercise. This is certainly how Economists treat it, coming at them using their statistical models. The goal is always to properly interpret these most basic of economic, financial, and monetary fundamentals so as to understand where everything that matters stands. Getting this wrong is the difference between night and day; between [...]
Like a child fixated on a shiny new toy, I was enthralled by trading in WTI futures on Monday. There are times when end-of-day closing prices just don’t capture the full extent of what actually goes on during the several hours of any regular session, and yesterday was certainly one of those times. We’ve been on top of front-end contango [...]
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