I mentioned yesterday in looking at the behavior of gold that it seems as if the “dollar” has entered a bit of a pause in its wider destructive reality of late. Maybe that coincidence with the SNB’s dramatic alteration offers an explanation for it, with renewed focus on the European end of eurdollars, or that these are merely complimentary of [...]
“Dollar” credit markets are completely unconvinced by the Establishment Survey that economic growth is at hand. Not only has this bearish/tightening trend been in place for over a year, uninterrupted too, it has actually picked up in the wake of last week’s “unquestionable” payroll expansion. The bearishness continues on all fronts, in tandem with oil prices which is not a [...]
As if it needed further clarification, the FOMC has gone its own way publicly against pretty much everything else because there is no other course that could even possibly end Hollywood-style. The constant reference to “slack” in the labor market is what gives this away. A potential reduction in labor slack would mean emphasis on inflation rather than unemployment. However, [...]
This is probably unusual in that posts intended as a discussion about the stock market typically feature stock prices or market indices. Rather, I intend to use here only bond market prices and indications and still make interpretations about stock market risk. My colleague Joe Calhoun has pegged stock investors as threading the needle – looking for data that is [...]
The interest in the plight of the Japanese and “their” economy is not just one of morbid curiosity, but of high relevance and perhaps even a glimpse of the future. It is both a cautionary tale about the command economy and, at the same time, a warning about such apathy derived from the failure to demand something different, or even [...]
Someone was apparently in need of 5-year TIPS late last week, as the yield dropped 14 bps on Thursday (from -0.06% to -0.20%) ahead of the holiday weekend. You might assign such a move to illiquid markets ahead of Easter, but the yield actually fell another 3 bps on Monday. Strangely enough, there was no reciprocal move in either the [...]
A basic building block of funding market dynamics is not only expected rate movements but the time value of money, i.e., the curve shape. Normally, you would expect a steeper yield curve to be consistent with stronger economic growth. In terms of dollar funding, you can package eurodollar trades (either bundles or packs of various “colors”) to buy short and [...]
The potency of QE is theoretically driven by how it is expected to influence economic agents’ perceptions of inflation. The concept of negative real interest rates after hitting the zero lower bound of nominal interest rates (ZIRP) is believed to nudge the behavior of participants in the economy to spend and borrow more as saving becomes relatively more expensive and [...]
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