After years of futility, he was sure of the answer. The Bank of Japan had spent the better part of the roaring nineties fighting against itself as much as the bubble which had burst at the outset of the decade. Letting fiscal authorities rule the day, Japan’s central bank had largely sat back introducing what it said was stimulus in [...]
They merely repeat the words, as it is intended. With major fanfare and widespread praise, the Federal Reserve weeks ago had announced it was going to buy corporate bonds. Well, not actual bonds but ETFs. It hasn’t bought a single one of those, either, at least not until today and yet the program is being assigned the usual magical properties. [...]
The military phase was an all-out joke. Carlos Castillo Armas had fewer than 500 men as his “invasion” force. Yet, with only that many he had expected to take back the entire country. More surprisingly, he succeeded. Lt. Colonel Armas had previously participated in the 1944 Guatemala uprising that had forced Jorge Ubico from power. As a supporter and close [...]
Hold all the congratulations. Jay Powell is, with a huge assist from the financial media, trying to pre-empt what comes next by taking a premature victory lap. The Fed isn’t just your central bank it is your friend. The amount of pure propaganda being put out lately is understandable if still disgusting. March was a good month to include [...]
It’s one of those crisis-level-of-illiquidity things that if you heard about it in normal times it would make you shake your head in disbelief. During a full-blown meltdown maybe it’s not standard stuff, but given the chaotic conditions it doesn’t seem so preposterous, either. Negative convexity is an otherwise benign phenomenon in fixed income that when combined with a lack [...]
Faced with severe economic distress and a global market meltdown, they promised that it would be big. Massive fiscal “stimulus”, however, might come at a price. In the short run it was necessary, according to the orthodox view. When a crisis shows up you don’t worry about how to pay for things. Once all is said and done, the current [...]
The eurodollar curve’s latest twist exposes what’s behind the long end. To recap: big down day in stocks which, for the first time in a while, wasn’t accompanied by massive buying in longer maturity UST’s. Instead, these were sold, too. Rumors of parity funds liquidating were all over the place, which is consistent with this curve behavior. Let’s start with [...]
The 3-month Treasury bill’s equivalent yield has plunged, absolutely plunged. It was 1.45% last Thursday. Today? All of 45 bps. A one-hundred bp drop in six trading sessions. One hundred. Six days. Rate cuts, right? Sure, that’s the premise. Like eurodollar futures, the front end of the yield curve is saying that there are more of them coming. The Fed’s [...]
Taking another look at what I wrote about repo and the latest developments yesterday, it may be worthwhile to spend some additional time on the “why” as it pertains to so much determined official blindness, an unshakeable devotion to otherwise easily explained lunar events. The short version: monetary authorities as well as the “experts” describe almost perfectly risk averse behavior [...]
With interest rates tumbling all over the world, gold should be killing it. Instead, gold is getting killed. The major correlation for this precious metal has been the bond market, falling yields. And that makes intuitive sense; gold as a hedge pays no interest, but if competing safety instruments like UST’s end up paying up a lot less then gold [...]
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