Almost exactly ten years later, central bankers believe they are so very close now to the end of the crisis. It doesn’t matter that they have made the same claim before, this time is different they say. Global growth is finally synchronized, and all the policy clocks can strike normal, or what passes for normal, almost all at once. There’s [...]
In the midst of revisions season, everything is up for re-evaluation. Some end up as big changes, others mere footnotes. A lot has been revised (lower) about the past few years, particularly surrounding the substantial downturn at the end of 2015. Inflation rates are not among that list. The PCE Deflator has been given only mild benchmark revisions in contrast [...]
Correctly interpreting the bond market is more than just how and when to invest your money in UST’s. Not that it isn’t useful in such a money management capacity, but interest rates starting at the risk-free tell us a lot about what is wholly unseen. There is simply no way to directly observe inside an economy what is taking place [...]
Nothing ever goes in a straight line. For every rally there will inevitably be a retracement, a minor selloff often of no more than profit taking. These are generally pauses where a durable trend either overcomes doubts, or succumbs to them. In the stock market, they call it the wall of worry. In bonds, it’s become a bit more complicated. [...]
In the strict cohort of central bankers, at least the Fed isn’t yet the Bank of Japan. The BoJ is run by straight clowns, a sort of weird performance art maybe due to almost thirty years of accomplishing nothing. Federal Reserve officials can at least manage to sound legitimate if still acting without success. In the grand scheme of things, [...]
After the Fed “raised rates” a little over a week ago, the US treasury market responded with another collective shrug. Long-term rates fell rather than rose, having already responded that way to the prior two hikes. The word “conundrum” has sadly been revived. It is unfortunate because treasury market behavior in the middle of the last decade was never a [...]
MF Global failed on a trade that would have made it enormously profitable. AIG’s portfolios of “toxic waste” ended up making money – for the Federal Reserve. Bear Stearns and Lehman Brothers were ended like the others by liquidity, not losses. SemGroup was another firm that went into bankruptcy during that period, but one that practically no one has heard [...]
The Federal Reserve defines price stability in terms of consumer prices rather than a stable currency. Up until 2012, any inflation target was implicit in monetary policy behavior rather than explicitly stated as an incorporated aspect. Everyone knew, of course, that the Fed had throughout the 1990’s sought a stable regime of around 2% growth in the PCE Deflator. Furthermore, [...]
For once, it does seem like the FOMC was asking of its members the right question. They spent years incredulous over the lack of effect due to whatever of the multiple QE’s without changing expectations. No matter how little evidence for their initial let alone ongoing success, they would always, always keep up the “recovery is coming” narrative. In many [...]
Earlier this month, China’s State Administration of Foreign Exchange (SAFE) reported a large increase in official reserve holdings. The biggest “inflows” in several years has, as you would expect, led to much optimistic commentary suggesting if not outright stating that the currency problems are no more. It is not the first time such claims have been made, as this has [...]
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