On April 2, the benchmark 10-year US Treasury yield traded below 2.75%. It had been as high as 2.94% in later February at the tail end of last year’s inflation hysteria. But after the shock of global liquidations in late January and early February, liquidity concerns would override again at least for a short while. After April 2, the BOND [...]
This has already been one of the longest economic expansions on record for the US and there is little in the data or markets to indicate that is about to come to an end. Current levels of the yield curve are comparable to late 2005 in the last cycle. It was almost two years later before we even had an [...]
One year ago today, something broke. It wasn't a big thing, practically a footnote seemingly not worth mainstream attention. Out of nowhere, the 4-week T-bill yield spiked. On Friday, September 1, 2017, the equivalent interest rate for the instrument was steady at 96 bps. That was already a problem because the Federal Reserve’s RRP was at the time set for [...]
These things are processes. They take time, a lot of time. Given that, I keep coming back to what might otherwise seem an absurd idea. The best-case scenario for all of us just might be a global crash, one that would make 2008 blush. At least then it might afford the world the benefit of unambiguousness. We almost got there [...]
Deutsche Bank wasn’t the only global institution under the gun of the US Justice Department. While the German bank settled for a record fine earlier this year, RBS was also hit. Theirs was an eye popping $4.9 billion settlement. The ostensibly British bank had already set aside $3.4 billion for the anticipated civil penalty, meaning that only $1.4 billion (and [...]
What is it that’s different in August? If there was some relative calm in global markets in June and July it certainly disappeared this month. The dollar shot higher and global liquidity indications began sinking again. Yields have fallen on safety (liquidity) instruments more apparently divorced from any other mainstream factors. One place to look for answers is Tokyo. I [...]
The Q2 GDP report (+4.1% from the previous quarter, annualized) was heralded by the administration as a great achievement and certainly putting a 4 handle on quarter to quarter growth has been rare this cycle, if not unheard of (Q4 '09, Q4 '11, Q2 & Q3 '14). But looking at the GDP change year over year shows a little different [...]
It was never really all that much. The best that might have been said was that it was a pause in the building of renewed deflationary pressures. The dollar had “risen” again especially in April and May, but then traded sideways through July. It wasn’t a rebound or even much that was positive, just less immediate heaviness. That appears to [...]
There is just something about August. It is irresistible, apparently, in all the wrong ways. For starters, there are big ones and small ones but somehow they all line up against liquidity and plentiful eurodollar money. In the former class there was, of course, August 9, 2007, August 9, 2011, and August 10, 2015. Even in the latter category there [...]
I’ve seen a lot of commentary lately describe conditions as if things are calmed down. There was a bit of growth scare, a little T-bill indigestion earlier in the year. The Chinese are somehow both stimulating their export sector by devaluing CNY, and also controlling the price of gold while they do it. The contradictory inflation/deflation signals have apparently just [...]
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