The Federal Reserve has done us a solid favor by opening wide its RRP window. Quite by accident, obviously, these policymakers hardly useful monetary stewards, we now have another indication, and a more direct one (though still indirect overall), relating on the surface two seemingly very different factors. The correlation found there between T-bills and that has increased the visibility [...]
Searching for clues or even small collateral indications, you can’t leave out the gold market. We’ve been on the lookout for scarcity primarily via the T-bill market, and that’s a good place to start, yet looking back to last March the relationship between bills and bullion was uniquely strong. It’s therefore a persuasive pattern if or when it turns up [...]
I had intended to lay off the T-bills today, just to write about something else, anything else, but, as often occurs, circumstances intervened. We’ve been subjecting you to seemingly unrelenting focus on Treasury bills’ various follies this year. The reason is quite simple, and trading early in the morning today a very good example both of “what” and “why.”FRBNY last [...]
I find it very uncomfortable to be in such agreement with monetary policy officials like Jay Powell. He and I both look at the inflation data, for example, and have come to the same conclusion that these consumer, producer, and commodity price deviations won’t last; though we arrive at our same view coming from very different use of analysis.Today, the [...]
Following this morning’s Treasury bill auctions, each of the last three for the three shortest maturities (4-week, 8-week, 13-week) have each priced to yield less than the new reverse repo “floor” rate set by the Federal Reserve last Thursday. The first two of those, a 4-week and an 8-week, took place on the new RRP’s first day. The latest is [...]
Ever since March 2020, GFC2, Federal Reserve officials from Jay Powell on down have been busy patting themselves on the back for their splendid performance during last year’s big event. Again, market-of-last-resort. It would’ve been much worse, they claim, particularly given what happened in the Treasury market itself which we are supposed to believe QE bailed out just in the [...]
When Ben Bernanke stood up in front of Milton Friedman (it was his 90th birthday) back in November 2002, what he told the co-author of A Monetary History was that the monetary account contained within its pages had become settled, the officially-accepted version of events. What had made the Great Depression truly prolonged and horrific had been the long-ago Federal [...]
Taking our limited repo example from Part 1 a step further still, in real-world operation a bank might put up any number of securities – including any it might have just that day obtained full title too – to secure financing all at once. Thus, there are groupings of securities over which the bank has varying degrees of control – [...]
Denmark’s Niels Bohr considered himself more of a philosopher than a physicist, yet he contributed so much to the groundbreaking approach that became the basis for quantum physics. At the same time Germany’s Werner Heisenberg was writing the famous paper on “his” uncertainty principle, Bohr was purportedly on vacation thinking up the deeper consequences and meaning of all its implications.Upon [...]
Why are Treasury bills the best of the best, the purest of the most pristine? The better part of the answer comes in the form of a mere three letters: O, T, and R. Those happen to stand for on-the-run which in repo simply means dependably liquid. OTR securities are those most recently auctioned thereby the specific securities which have [...]
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