One final note for 2017 with regard to the long end of the Treasury curve. It may seem as if the interest rate fallacy would combine with specific bouts of illiquidity to create falling yields during them. That is not always the case, and, in fact, a lot of times the opposite does occur. Take October 15, 2014, for example. [...]
I suppose it’s easy to look at gold and see only fear. It is, after all, the ultimate currency hedge. Therefore, if the price is rising there is probably a good chance fear over monetary considerations is, too. The opposite interpretation, then, would appear to be just as straightforward, but it’s often complicated by the mechanics of wholesale global eurodollar [...]
One of Candidate Trump’s biggest priorities was to renegotiate NAFTA. Seen as an accelerator for harm not just inside of the nation’s rust belt, the incoming administration made it a top priority. Blaming the trade deal for the loss of 700k manufacturing jobs, Robert Lighthizer, the US’s top trade official for the renegotiation process, said in August as talks got [...]
If China wishes to ever throw off the shackles of the eurodollar system, and they do, to eventually go out on its own in an RMB dominated world there is a lot to cleanup long before that’s ever an attainable goal. To start with, we don’t know near enough about what’s going on inside that country’s financial and economic system. [...]
We ended last week with a clear sign that global “dollars” are in (escalating) shortage. I would write “again” with that sentence but there is every indication that said shortage never really ended. It’s not like last year’s “reflation” was a switch from insufficient supply to sufficient, rather it was a relative change to a degree that isn’t easily established [...]
Back in early October, I noted that repo fails had jumped above $250 billion (combined “to receive” and “to deliver”) for three weeks straight. That wasn’t an auspicious result, as sustained collateral problems like that don’t correlate to happy things. It all began the week of September 5, in what seemed like a minor one-day nuisance over the 4-week bill [...]
The PBOC has two seemingly competing objectives that in reality are one and the same. Overnight, China’s central bank raised two of its money rates. The rate it charges mostly the biggest banks for access to the Medium-term Lending Facility (MLF) was increased by 5 bps to 3.25%. In addition, its reverse repo interest settings were also moved up by [...]
When we look back at the period known as the Great Inflation there is a tendency, I believe, to truncate the episode only to the most well-known parts. What many people remember are things like gas lines, where oil problems and embargoes left Americans at several points in the seventies too often stuck for trying fill up their autos (or [...]
Ronald Coase was one of the few economists who was easy to admire. There are and have been a few out there, and it was Coase by and large leading the critique of the increasingly detached state of economics (really Economics). In his 1991 Nobel Prize acceptance speech, he was as usual blunt in his admonishments, saying, “I have made [...]
The timing just never seems to fall in our favor. If we had had this conversation ten years ago as would have been appropriate, then this evolution might have fell perfectly in our collective laps. Just as the global financial system, really the international, interbank monetary system of the eurodollar, was crashing all around us, the genesis block of the [...]
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