The Chinese have been undergoing quite a bit of stress lately, with markets including stocks more likely to be in turmoil than not. In fixed income, the Finance Ministry was slightly shaken by a failed auction today, its first since summer 2015. Yesterday, government bond futures trading had to be suspended when the 10s and 5s experienced their largest drop [...]
One of the biggest challenges facing central banks in this increasingly post-myth environment is that they have to deal with the consequences of those past myths. Not all that long ago, it was widely believed that a central bank just did what it wanted to do, and that was the end of all discussion. If the Federal Reserve wanted to [...]
Before October 1997, what would become known as the Asian flu was just another opportunity for the mainstream to dismiss what many people, including many prominent, competent people, had been warning about for years before. The usual refrain thrown back at them was some form of “you are missing out.” People, of course, never really learn from these episodes because [...]
It is an apparent contradiction to where we can describe a desperate money supply situation yet stock prices, in particular, are at all-time highs or at least outwardly unconcerned about all of it. This isn’t anything new, however, as noted last week where we may be witnessing the third or fourth iteration of the same repeating cycle. It was, after [...]
So how does it end? It’s the only question that matters, more so perhaps than asking when this “end” might occur. We see the “dollar” tanking currencies again, though mostly the majors this time, but currencies have tanked for as long as they have floated; and a great many before that time, too. Is there something different now that wasn’t [...]
The Treasury Department’s Treasury International Custody (TIC) estimates for September were released, and though I wish they were timelier they do typically confirm what we suspect about the months at each update. There were negatives all over this latest month, including private flows, which would fit the overall narrative where Chinese money markets were all over the place and repo [...]
There bond selloff intensified the past few days in the wake of the election. I still believe that the potential Trump represents, rather than anything that has been specifically proposed, is the likely catalyst. I am also quite certain that goes along with the change in Chinese behavior where RMB are far more plentiful now than just a few weeks [...]
In early July, the Bank of Japan may or may not have contemplated the mother of all “stimulus.” Rumors began to fly that the Japanese central bank was, in fact, seriously considering an actual monetary helicopter as a way to boost flagging confidence rightly suspicious of any more QQE (or NIRP). We won’t know for some time (when the meeting [...]
A great many asset classes have been moving almost perfectly sideways for months now. That is unusual by any standard, but more so given the circumstances of late 2016. This might be indicative of doubts, some of which are being reinforced by weakness that might be characterized as “unexpected” but really no longer is. Today’s data on Chinese exports is [...]
On January 10, the South African rand crashed about 9% in just a matter of minutes. It was the largest move for the currency since October 2008, an ominous yet poignant sign of just how bad everything was globally at that time. CNY had been pummeled up until the PBOC acted but a few days before. Even though the world [...]
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