Following up with some further observations in funding markets, the change in character of the “dollar” has shown up in some of these places. As I have noted before, the eurodollar curve gained an upward bias in shorter term “dollar” rates, and thus “tightening”, while the rest of the curve continued to flatten out. Going from August to September, that [...]
Going back to the yearlong period (more like fourteen months) where inflation breakevens fell into the apparent nothingness of being almost wholly range-bound, I surmised that the artificial placidity had to do with the inability of market participants to let go of their normally all-consuming faith in Fed optimism. On the one side, economists, particularly the central bankers all over [...]
“We don’t exactly know how it will work” should be stamped upon every message coming from the policymaking apparatus from this point forward, and then retroactively applied to every message in the age of risk and rate repression. Action in short-term money markets has heated up yet again, and that is not a positive statement toward vital function. To “exit” [...]
With Brazil in recession and much of the “resource” part of the supply chain nearing that or worrying about it, you can surely bet that there are “unexpected” problems in the Chinese economy. As much as the word “decoupling” is being used once again (though in 2008 it was reversed, with the world supposedly able to decouple from US weakness) [...]
Since we are now in the middle of the final month of a quarter, checking repo stats shows what we have come to expect of a fragile liquidity system. Once again, repo fails spiked sharply in the latest weekly statistics from FRBNY as primary dealers and the Fed’s own repo “fix” fail to affect the “resiliency” that FOMC members appear [...]
Shorter version on secular stagnation and Jackson Hole equivocation on QE's end: “We had to blow bubbles because that’s the only way to get the economy to grow, and now we have to start thinking about the inevitable consequences of that.” As does the bond market. There is nothing yet, however, to break the rationalization streak in stocks. **Shiller CAPE [...]
As is usual at this time of year, the Chairman of the Federal Reserve Board and FOMC will gain inordinate attention due to the upcoming Jackson Hole assembly. Ben Bernanke in his stint made use of the PR to first introduce his ideas about coming intervention and manipulation. Janet Yellen may or may not do the same, but she will [...]
It is hard to believe that this past weekend marked the seventh anniversary of the paradigm shift in global financial function. Everything that has occurred in the years since can be traced to those days in August 2007 when money markets broke down for the first time. Even the current, though measured, move away from the US dollar in global [...]
The stock market and the traders who rule it seem to have had a change of heart last week. Stocks were down over 2% with most of that coming Thursday with a 300+ point drop in the Dow Jones Industrial Average. The Dow - and small caps - are now down for the year although the S&P and NASDAQ are [...]
Now that Janet Yellen is back in the spotlight trying to convince the world that everything is good and nearly normal, credit markets continue to persist in another frame of reference. The good Chairman might be herself convinced (though I have doubts about what she really thinks) of what she determines as a the “central tendency”, but past central tendency [...]
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