For one, eurodollar futures are “obliged” to take account of any threats from the FOMC even though, in the end, they might only be self-fulfilling. Because the Fed has very little actual ability to condition money markets, none of that is truly “real” but there remains the unknown and money dealing agents still seem reticent about any kind of (further) [...]
It all started with Japan so it makes sense to start there. As anyone who wishes might know, the Bank of Japan has pioneered the QE business to the point beyond extrapolation. They were first to do it, first to “have” to expand it, and first to go back to it over and over and over. BoJ is on at [...]
Written Wednesday Oct 28 There is much less to an FOMC statement than the FOMC minutes, all far less than the actual meeting transcripts. That is why the statement is available immediately, the minutes within a month , but you will wait more than 5 years for the actual discussion. In the case of this “recovery”, that delay worked to [...]
The US Producer Price Index declined 0.5% month-over-month in September, much farther than the 0.2% drop expected by economists (statisticians, really). With retail sales providing little positive emphasis even among the large segment of commentary focused exclusively on the monthly variation rather than the intense consequence of wider context, the idea that the Fed will confirm the final stage of [...]
You wouldn’t know it from stock trading or commodities, but when China reopened after its latest Golden Week holiday there was an obvious effect. Stocks have continued to surge while commodities overall have had a good week (copper up another $0.07 today, with WTI at about $50). Inside the money markets, however, China’s open was met with far less enthusiasm, [...]
Asset markets on Friday reversed course after fully digesting a payroll report that has been universally assailed. The thinking is, apparently, that the Fed will have no choice but to stay on the sidelines now. That view is certainly bolstered by the FOMC’s inaction already in September, so worsening economic fortunes in the US apparently removes any flexibility anytime soon. [...]
On this side of the “dollar” world, credit markets have all but written Janet Yellen into irrelevance. Despite her pleas (because of?) last week, there isn’t any part of money dealing or fixed income that is taking her “certainty” about recovery and “inflation” as even a partial setting. So lost is the FOMC, that everywhere you turn these markets are [...]
Japan’s Prime Minister Shinzo Abe declared last week that Japan is no longer suffering from deflation the day after his own government statistics showed that Japanese prices declined for the first time since QQE began. That is actually great news for the Japanese people, though Abe and Kuroda at the Bank of Japan continually pledge to end the relief. Abe’s [...]
While outward asset markets have clearly been upended by the implications (at long last) of the Fed not doing anything, the internals of the money/”dollar” markets are actually worse. I don’t know if it could be classified as another forming “dollar” wave, but it doesn’t look good from this vantage point heading into an uncertain weekend. In many ways, the [...]
When something deviates so far from expectations, the last thing you would do is dismiss it as unimportant. Yet, that is exactly what has happened in 2015 among the cabal of economists that claim to be able to control monetary levers of economic interjection. It’s not just that the FOMC will not act as it was so sure it would, [...]
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