It was the clash of all clashes, the textbook up against practice in a real world falling apart. Theory’s chance to save the day and prove itself, what should’ve been the legend’s finest hour. Time to put up, or... On the one side, there was the “money” we’re all told is easily created, and on the other what may have [...]
As a follow-up to the post-October correlation in Treasuries, it’s worth reiterating how much more compelling the flattening curve has been given the full range of circumstances otherwise all lined up directly opposed to it. There has been: 1. Accelerating CPI.2. Higher oil prices.3. Looming rate hikes.4. Outwardly favorable labor data turbocharging expectations for even more aggressive rate hikes (and [...]
You have to hand it to Willian Dudley. Having committed one egregious error after another while in charge of the Fed’s New York-based Open Market Desk during the first Global Financial Crisis, Bill was kicked upstairs anyway to run that entire central bank branch following the debacle. He then continued on in the same spirit and with the same results. [...]
By no means are any of these PMI numbers terrible. In the vacuum of mainstream Economics' ceteris paribus fantasy, these might all be mildly pleasing. There is no such thing, however, and despite where they now are these are verging closer to comparisons which could be, several already have been, concerning. As such, the direction and trend being established as [...]
Stop me if you’ve heard this before. Longtime readers/followers/enthusiasts will be forgiven for immediately thinking I’m quoting myself again, as I so often do: Following its emergence, the eurodollar market played a big role in the Bretton Woods system and also its breakdown and eventual demise in the early 1970s. The primary reason I refer so much to my own [...]
We’ve been here before, near exactly here. On this side of the Pacific Ocean, in the US particularly the situation was said to be just grand. The economy was responding nicely to QE’s 3 and 4 (yes, there were four of them by that point), Federal Reserve Chairman Ben Bernanke had said in the middle of 2013 it was becoming [...]
I guess I took my own advice a little too literally. I did write that when the eurodollar futures curve first inverted, it was going to be dull. Didn’t start out that way, of course, with a small bit of theatrics right during that front week in December when the inversion first showed up. Ever since then, it has stuck [...]
Because there is no actual money in monetary policy, central banks have forced themselves (by having abandoned the monetary system decades ago) into an economic role that looks something like a hypnotist’s. Inflation is a monetary phenomenon, the man said, but in lieu of any practical experience in money what is a central bank to do?Manipulate emotion. Give it a [...]
The economy was in danger of running hot, too hot they all said. In order to stay ahead of such inflation potential, as central bankers saw it, first it would be necessary to wind down quantitative easing. Taper then terminate. After that, rate hikes.Hawks buzzing around everywhere.But Mario Draghi’s ECB had a problem. The inflationary pressures were there, he reasoned, [...]
With the eurodollar futures curve slightly inverted, the implications of it are somewhat specific to the features of that particular market. And there’s more than enough reason to reasonably suspect this development is more specifically deflationary money than more general economic concerns. What I mean is, those latter have come later (“growth scare”) only long after the world’s real money [...]
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