Global factors. Both for inflation as well as money, in fact money therefore inflation. Only recently, yesterday, in fact, has the Federal Reserve pulled back the official curtain of silence and illiteracy if only a little to admit there’s so much more than what you’ve ever been told. Bank reserves aren’t the end of the story, especially in light of [...]
For a short while, with reflation being traded in almost every corner of the global bond market, the Bank of Japan started to get “those” questions again. Almost of the humble brag variety. A few years ago, Japan’s central bank had widened what it considered to be an acceptable trading range for its 2016 QQE addendum of Yield Curve Control [...]
The Aussies weren’t the first to drive into the YCC channel. That “honor” belonged instead where it always does: Japan. The Japanese had also pioneered yield curve control just like they had for practically every single element behind post-crisis monetary policy everywhere else around the world. It’s always a safe bet that if some central bank somewhere starts doing something [...]
If you tally up the amount of local government debt and add it to the total owed by Japan’s central government, at the close of fiscal year 1991 it wasn’t too bad. The Japanese had always been fiscally responsible especially when compared to any of that nation’s big economy peers. In those early days of the “lost decade”, the balance [...]
They were never very specific to begin with, even in Ben Bernanke’s infamous November 2010 Post op-ed covering the start of QE2. Officials like to keep it purposefully vague as a kind of dry powder, a margin for error. If bureaucrats become too specific, the public would reasonably hold them to their own standard being laid out. The point behind [...]
Between November 1998 and February 1999, Japan’s government bond (JGB) market was utterly decimated. You want to find an historical example of a real bond rout (no caps nor exclamations necessary), take a look at what happened during those three exhilarating (if you were a government official) months. The JGB 10-year yield had dropped to a low of just 77.2 [...]
Why do we care so much about inflation targeting in any form? Ask that question of a central banker and they will merely state the answer is self-evident before calling the police to have you arrested and thrown in jail for daring to query. Inflation targeting is central to this version of the central bank, so much so it has [...]
If we are going to see negative nominal Treasury rates, what would guide yields toward such a plunge? It seems like a recession is the ticket, the only way would have to be a major economic downturn. Since we’ve already experienced one in 2020, a big one no less, and are already on our way back up to recovery (some [...]
The Bank of Japan has been paying Japanese banks a supplement on loans they collateralize with the central bank. This program is not new, announced first during the depths of COVID earlier this year, but its growing popularity has demanded attention. In addition to this market “support”, in April BoJ added a bonus of 10 bps to each pledged loan.The [...]
The Federal Reserve has cut its QE purchasing pace, and yet the US Treasury Department doesn’t seem hampered by a shortage of bidders for its record-setting note auctions. Far from “too many” Treasuries, prices are once more unequivocal how there aren’t enough. With or without Powell, the auction record is clear and, unlike those constantly talking up the BOND ROUT!!! [...]
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