We all know, or we think we do, what happens when central banks print money. There are any number of historical images from which we can refresh our collective memory. Weimar Germany usually comes to mind, as does Venezuela or Zimbabwe in recent times. But what about the opposite? It sounds absurd. No government officials in their right mind would [...]
A major part of any yield curve is inflation expectations. Nominal growth particularly toward the longer end of curves sets the agenda for trading. But further out there are several confluences that may cause distortions. For Economists, these are conundrums. There are times, however, when curve dynamics remain pretty simple. These are not usually the best of times. As my [...]
Why is SHIBOR falling from an economic perspective? Simple again. China’s growth both on its own and as a reflection of actual global growth has stalled. And in a dynamic, non-linear world stalled equals trouble. Going all the way back to early 2017, there’s been no acceleration (and more than a little deceleration). The reflation economy got started in 2016 [...]
Globally synchronized growth has taken a beating so far in 2018. As a narrative, one factor after another has turned against it. Europe was booming and was even going to be in a leadership position for the global economy. Now? Not so much. The dollar would continue to fall just as it did in the years before Bear Stearns, a [...]
I’ve seen a lot of commentary lately describe conditions as if things are calmed down. There was a bit of growth scare, a little T-bill indigestion earlier in the year. The Chinese are somehow both stimulating their export sector by devaluing CNY, and also controlling the price of gold while they do it. The contradictory inflation/deflation signals have apparently just [...]
Why did Treasury bonds selloff on Wednesday? Obviously, we can’t ever know for sure why markets move the way they do especially in the shortest timeframes. Still, that won’t stop us from speculating anyway. The 10-year UST yield spiked just above 3% in early trading Wednesday morning. This particular drive began the night before. Treasury futures had been flat for [...]
Argentina has had a good month of July. When last we checked toward the end of June, the peso was still plummeting. It would nearly close below 29, an absolutely astounding drop that made plain this wasn’t devaluation as “stimulus.” That plus the whole record IMF bailout and the immediate dollar funding that came with it. That was June 7, [...]
In 1962, physicist Wolfgang Panofsky finally obtained funding from the Atomic Energy Commission. As a faculty member at Stanford University he wanted the federal government to fund his monster. Dubbed Project M, for monster, Dr. Panofsky was seeking a method for scientists to obtain evidence for what was really going on inside the atom. The project was really a linear [...]
One of the most disgusting and least self-aware passages in any of the tens of thousands of published pages of FOMC discussions was in reference to the People’s Bank of China. On September 16, 2008, the US central bank’s operating and policy committee was sharing a laugh at the expense of their Chinese counterparts. Some solemnity and internal reflection should [...]
For the second half of 2015, how dicey did it really get in China? It’s difficult to assess going by something like real GDP given how notorious the Chinese have become for hitting their growth targets no matter what. But for those two quarters we can infer a whole bunch of nasty problems by the difference between real GPD growth [...]
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