There are several factors missing from the latest eurodollar rout. Well, not really missing so much as sitting this one out to this point in time. We knew things were really getting serious in 2015 when the Japanese yen joined the currency parade. Only it didn’t fall as others had, JPY rather rose very much against the Bank of Japan. [...]
In July 2014, then-Federal Reserve Chairman Janet Yellen testified before Congress. It was the usual Humphrey-Hawkins stuff, except in this instance at that particular time there was every reason to suspect things were finally changing. The unemployment rate, in particular, was sinking like a stone dropped in a pond. Some additional economic indicators signaled perhaps the pathway toward substantial improvement [...]
In all honesty, I do mean to beat this one particular dead horse. In fact, I intend to pulverize it until there is nothing left but the smallest particulate matter. This is everything that is wrong with how things are right now. Either they are willing to put out what could only be legitimately classified as outright propaganda (lies), or [...]
It’s been a wild month for copper. June began normal enough for the metal, with the front month futures price (HG1) still ~$3.05 where it had traded since early March. Then, out of nowhere, the price surged. Starting June 4, in a matter of days HG1 was just less than $3.30. It was the highest price of the year and [...]
Before August 2007, US$ money markets operated efficiently and predictably. They behaved according to a rigid hierarchy, which is a good thing no matter how it may sound. This inflexibility in the context of funding markets was exactly what we would want. Arbitrage opportunity was responsible for enforcing the rules. One simple example was the difference between repo and federal [...]
Well before Jerome Powell changed his dots a little, or the ECB chickened out, the Reserve Bank of India had already acted. For the first time since January 2014, on June 6 the RBI raised its benchmark repo rate. Rather than reverse the rupee’s slide it appears to have renewed it. The euro may have routed yesterday and hogged all the [...]
Last week, it was overseas central bankers who stole the show. Many of them particularly in EM locations have had a really rough go of late, and a few in particular wanted the world to pay attention to dollars. Not any dollars, of course, as that would be far too easy. Rather, offshore “dollar” markets have found a few voices. [...]
Last week, I reported on a sharp drop in repo fails for the week of May 9. The decline was so much that FRBNY indicated there were essentially no fails during those five trading sessions. It was way out of line with recent history and opened up little more than wild speculation as to what might have caused it. One [...]
The Crash of ’87 was a big deal, though not in the way most people remember. It was a stock market event, obviously, and those are the terms under which it has been understood. That’s not really its legacy, however, as the major shifts that began with Black Monday have had little and most often nothing to do with stocks [...]
Observing the eurodollar system as I’ve done for so many years, you have to be prepared for curve balls thrown at you. Just when you think you’ve got it clocked (sometimes literally), something changes and it all gets tossed out the window. About a month ago, the Federal Reserve reported a sharp drop of UST’s in custody on behalf of [...]
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