We have been talking about a global “dollar” run for the better part of two weeks, and at least a major “dollar” disruption looming going back three months. To say that any of the latest chaos is “unexpected” is intentionally obtuse, but it has already happened. As it is, I think we can expect FRBNY and the Treasury to issue [...]
Having past the fifteenth of the month, the first month in the new quarter, the repo “cycle” for the quarter end has completed. Repo rates have followed almost exactly the same pattern as three months earlier, pivoting on both the quarter end and the 15th each time. This is not just unusual, it shouldn’t happen. Compared with other quarter-end periods, [...]
Where money markets seem to be regularly unsettled, credit markets are quite the opposite. Those two polar interpretations may, in fact, be quite related as credit markets are not really supposed to be so placid. Yet, here we find them again lacking much determination in any one direction. Inflation breakevens which were steadily rising from January 15 to May 6 [...]
With Greece settled and China moving away, for now at least, from the edge, it appears as if the “dollar” has settled back from the collateral calls of last week. That would make July 15 as seemingly as much of a dud as April 15 was, both in sharp contrast to October 15 and then January 15. That does not [...]
There is a lot about the crash in Chinese stocks that remains out of view. Of course, margin debt persists at the forefront of the reversal but I don’t think that begins to explain the depth and speed of the downturn. The timing seems to line up with very well with official policy measures intended to slow down the stock [...]
When looking toward what might be coming next from the FOMC, the reigning theme remains “they don’t know what they are doing.” That sentiment applies, of course, retroactively to all the QE’s, Twists and badly implemented emergency measures on the way down, but attention is rightfully focused now on how to get to C. Going from A to B already, [...]
I had hoped that something would have happened by now and that April 15 would follow more closely the October 15 and January 15 events, if only for the sake of experimentation. We don’t really need any additional illiquidity and certainly nothing as globally severe as those, but with function the way it is and everything so stretched and imbalanced [...]
Apparently the stasis that has infected credit markets has been visited upon gold prices. Going back to late March, gold has straddled the $1,300 level without straying too far on either side. As with other credit market prices, such stability is conspicuously different from what would be considered “normal” market behavior. Is it possible the two opposing forces affecting gold [...]
As gold established price behavior based on forward rate movements in 2013, it is clear that the ebb of each successive wave of collateral selling was met with less intensity on the price upswing. There are a number of reasons for that, including the price volatility on the downside and central banks conspiring to convince markets that “tail risks” are [...]
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