I suppose it’s easy to look at gold and see only fear. It is, after all, the ultimate currency hedge. Therefore, if the price is rising there is probably a good chance fear over monetary considerations is, too. The opposite interpretation, then, would appear to be just as straightforward, but it’s often complicated by the mechanics of wholesale global eurodollar [...]
One of Candidate Trump’s biggest priorities was to renegotiate NAFTA. Seen as an accelerator for harm not just inside of the nation’s rust belt, the incoming administration made it a top priority. Blaming the trade deal for the loss of 700k manufacturing jobs, Robert Lighthizer, the US’s top trade official for the renegotiation process, said in August as talks got [...]
Why would any central bank try to disguise the fact that it is being highly accommodative in its own money markets? That would be a strange place to start, made all the more so by the further observation the same central bank is perfectly happy if you thought it was doing the opposite. Cryptic introduction aside, it is obvious I [...]
We ended last week with a clear sign that global “dollars” are in (escalating) shortage. I would write “again” with that sentence but there is every indication that said shortage never really ended. It’s not like last year’s “reflation” was a switch from insufficient supply to sufficient, rather it was a relative change to a degree that isn’t easily established [...]
Back in early October, I noted that repo fails had jumped above $250 billion (combined “to receive” and “to deliver”) for three weeks straight. That wasn’t an auspicious result, as sustained collateral problems like that don’t correlate to happy things. It all began the week of September 5, in what seemed like a minor one-day nuisance over the 4-week bill [...]
As part of its effort to stress its own self-importance, the Federal Reserve conducts a survey of the Primary Dealer members through its New York branch. A written questionnaire is sent out to each bank in advance of every monetary policy meeting. The purpose is for monetary policymakers to make sure that there aren’t any big surprises, that the market, [...]
It's been a week of quite righteous focus on collateral. The 4-week bill equivalent yield closes it at just 114 bps, with only three days left before the RRP "floor" is moved up by the FOMC to 125 bps. That's too much premium in price, though we know why given what FRBNY reported for repo fails last week. With all [...]
I’m going to go out on a limb and claim there is something seriously wrong in repo. All jokes aside, I know it sounds like a broken record but the dimension that matters is not intermittent collateral problems so much as the greater intensity to them and in a condensing timeframe. Escalation is a description you really don’t want to [...]
You do have to wonder to whom the increasingly shrill bond market declarations are being directed. It’s very likely that Bloomberg’s now daily haranguing “the yield curve can’t possibly be right” tirades aren’t meant for UST investors. Rather, it is perfectly evident that the treasury market is going to do what it does regardless, and that the media, in general, [...]
The FOMC is holding its next regular policy meeting next week. It is widely expected that on December 13 the Federal Reserve’s policy body will vote and publicize the next “rate hike” in its exit strategy. Starting in December 2015, this next one, if it happens, will be the fifth in the series. It would bring the IOER “ceiling” (or [...]
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