It is exceedingly difficult to interpret the data in any other manner. That is bolstered greatly by reality of the post-taper environment, where issuance has declined dramatically. Yet, it was the talk of taper originally that set that decline in motion, echoing the feedback effects of this “extraordinary” monetary intrusion. Since Bernanke’s QE3 promise back in September 2012, repo volumes [...]
Retail flows, in my analysis, having absorbed any minor trepidation from the debt ceiling and shut down, are seemingly positioned as if taper and monetary policy are back to last year’s unlimited promises. That may very well be the case, though it does not appear as if institutional positioning agrees. In my mind, the MBS and UST portions of the [...]
Our long wait is nearly over. The Fed meets this week and is widely expected to announce a reduction in their purchases of Treasuries and Mortgage Backed Securities. The consensus seems to be that the Fed will reduce its purchases by $10-20 billion per month with the emphasis on reducing Treasury purchases. The reasoning is that with the reduction in [...]
The annual Jackson Hole central banker extravaganza is in full swing and ZeroHedge notes a couple of important new factors in the ongoing taper drama. First, an academic “study” on how to withdraw QE without disrupting the real economy. In that study, the authors make the following claim: “The Fed’s purchases of a substantial amount of the new issuance of [...]
I have been pounding the table for months about QE and its inverse relationship with vital banking liquidity. In engaging in Large Scale Asset Purchases (LSAP) central banks, particularly in the US and Japan, are playing a very dangerous game. Despite conventional “wisdom” that when a central bank engages in such a monetary easing program it must lead to an [...]
The talk of tapering QE has been incessant the past few weeks, no doubt playing a huge role in the volatility of the US Treasury market (as if there is some competition with the JGB market). Yesterday’s dramatic selloff has been absurdly linked to consumer confidence numbers and “improving” economic fundamentals, as if bond rates suddenly care about improving consumer [...]
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