The primary challenge of trying to unravel wholesale finance is the innumerable and often impenetrable layers. Making important distinctions is quite tricky, as you have to account for additional dimensions above and beyond what might pass for reasonable expectations. The repo market offers a good example of that, as you have supply and demand for cash “helping” set the repo [...]
With a week to go before April 15, GC repo rates remain undisturbed from their recent elevated fashion. The rate of decline has also slowed appreciably, down to just a few pips today, as volume continues to be stable at an also raised level (compared to recent conditions). And despite the FOMC minutes, the eurodollar curve has only moves 1-2bps [...]
The June 2003 FOMC meeting is one of those events that has only taken on increased relevance and significance with time. That gathering marked a major shift in monetary policy as it was, particularly with relation to the fomented housing bubble, as the FOMC was debating the zero lower bound. The discussion centered around the proposed monetary alignment that would [...]
From a purely, detached analytical perspective it is highly fascinating the possibility of observing a liquidity “development” in almost realtime whether one develops or not. If past patterns hold, and there isn’t any specific expectation for that other than heightened probability due to systemic recurrence, then April 15 is a target point for the next one in the series. This [...]
Usually references to April 15 are reserved for income taxes, but in this case that preference may be superseded. Recognizing the illiquidity pattern of the “rising dollar” means being vigilant toward the next expected instance. If October 15 was an “event” followed by January 15 in succession, then it is reasonable to at least anticipate conditions for April 15. To [...]
The Federal Reserve is running another large-scale test on its Term Deposit Facility (TDF), the account by which it intends to establish a European-style floor to its also intended interest rate corridor. Judging by the fact that nobody has paid any attention to this test or the one that preceded it, except for those that were fooled into thinking the [...]
For almost a year now, even before 2014’s version of winter, the constant theme has been one of growing and robust jobs. It had become so ubiquitous as to infiltrate every economic data point, including the housing market. There was some correlation last year between the sentiment about payroll expansion and at least a tepid rebound in home sales, but [...]
Adding to the disfavor in real estate and housing, the National Association of Realtor’s projection for existing home sales (resales) in November was just as ugly (if not more so) as home construction estimates. Resales were down a rather steep 6.5% from October (SAAR’s), and were up only 2.1% compared to November 2013. I say “only” because the calendar has [...]
There is a slow but steadily building sense that there is more than a little problem with systemic liquidity as it stands right now. While not quite mainstream, there has been some minor attention devoted to repo problems and now credit trading. An article in Bloomberg today does a pretty good job of sketching out the real world as it [...]
Since we are now in the middle of the final month of a quarter, checking repo stats shows what we have come to expect of a fragile liquidity system. Once again, repo fails spiked sharply in the latest weekly statistics from FRBNY as primary dealers and the Fed’s own repo “fix” fail to affect the “resiliency” that FOMC members appear [...]
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