We spend a lot of time and effort decrying the state of conventional wisdom around here, but for good reason. For gold, convention posits a store of value that is demanded greatly in times of inflation, and as such is a reliable alternate measure of it. In terms of exchange, that would mean investors increase their preference for “moneylike” assets [...]
The immediate response to the December taper was to sell off in dollar funding markets, but overall the shape of the yield curve has been decidedly toward flattening. That started conspicuously on November 20 (with the Fed’s sudden POMO interest in the 10-year) and has only increased in the weeks since taper. We will have to see about today’s additional [...]
To spare any suspense, the answer is the New York Branch of the Federal Reserve. There has been a clear and obvious shift in the target for the POMO end of QE purchasing. This happened the week of November 20; that same date that I highlighted yesterday as important systemically. This adds to that picture. Before getting too far ahead, [...]
While the applications of monetary policy are clearly missing their mark on "Main Street", there is the other side of the equation where the leading edge of psychology is firmly planted. Extreme levels of pretty much everything, from stock buybacks and investor sentiment to margin debt and leverage, have caught the attention of policymakers for good reason. Click here to sign [...]
After the violent reaction to the idea of tapering QE this summer, the FOMC members went on a mission to convince skeptical dollar markets that tapering was not tightening. Where the FOMC sees an adjustment to the toolkit, or the tactical approach, the overall strategy of loose monetary “stimulation” is, in their estimation, unassailable. Obviously, the funding markets disagreed; vehemently. [...]
After the results from this summer, it was clear that if there was ever going to be a reduction in the pace of QE it would “have” to be accompanied by something more amenable to fickle “markets.” I leaned more toward the camp that saw taper coupled to a decrease in the IOER, particularly now that the reverse repo program [...]
The headline says nothing but good news for Toyota, and by extension the viability of Abenomics. The Japanese carmaker is boosting its guidance for this year in terms of both revenues and profits. And it is all a sham, as this Financial Times article makes clear in very short order. First, the “good”… “Toyota has raised its full-year profit expectations [...]
Don’t look now, but US dollars are tightening again. The dollar calm that swept over markets since September 4 appears to have reached a nadir on October 23. Eurodollar markets in late October only moved very slightly, but enough to keep futures from rolling with the calendar, and thus indicating that risk positions and balance sheet expansion might be changing. [...]
I spend a lot of time on Japan not simply because it is the originator for the great QE experiment, rather the similarities between the US and Japan are well-worn and numerous. The primary interest in 2013, with the central banks of both going all out in monetary cajoling, is that those similarities are growing ever-closer. A few days ago [...]
That there was no change to QE was not really unexpected in October, though consensus about this kind of policymaking theater has become somewhat of a crapshoot. The reason is, contrary to pre-crisis experience, a growing and more obvious schism in the FOMC façade. There have been disagreements in the past, uncovered by the delayed release of full meeting transcripts, [...]
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