It is hard to believe that this past weekend marked the seventh anniversary of the paradigm shift in global financial function. Everything that has occurred in the years since can be traced to those days in August 2007 when money markets broke down for the first time. Even the current, though measured, move away from the US dollar in global [...]
What follows here, in the interest of full disclosure, is nothing more than speculative conjecture on my part. This is due mostly to the opacity that dominates gold “markets” and trading oddities that follow from it. My thoughts here are based on gut instinct about recent observations, but that is about as much to solidify any analysis as can be [...]
I have to say that I am more than a little amused by the “news” that the US Treasury Dept. is asking for comment from the primary dealers about the recent repo fails. As Bloomberg put it succinctly, “The Treasury also asked the dealers to explain the causes for an increase recently in “fails-to-deliver” in the market for U.S. government [...]
With the latest data from FRBNY in hand, the surge in repo fails authorities and certain credit market observers that were stressed over the affair, it is actually confirmation of regularity, and thus a high degree of systemic deficiency. Further, as a real world test, it ends any credibility the reverse repo program had as an institutional tool for maintaining [...]
One more post on the FOMC statement as I think it is vitally important in the context of financial function. I already covered the economic end of it, which is comparatively undesirable itself, but the only mention of repo in the statement was in reference to the assumed high degree of effectiveness of the reverse repo/IOER “floor” the Fed has [...]
What happens at the quarterly window dressing periods for the domestic banking system (which includes foreign subsidiaries chartered for US business) is essentially a gaming of the leverage ratios. As with everything inside the Basel paradigm, banks make themselves look less risky for their reporting periods. In terms of funding markets, that means massaging short-term liabilities, particularly repo. To do [...]
If the Federal Reserve is on course to “normalize” monetary policy within the context of a self-sustaining recovery, nobody told the credit markets. That isn’t quite true, though, as investors in the credit markets have been inundated with such talk and speculation for a some time; they are apparently just ignoring it. At best, the most that can be said [...]
The positive price action in gold of the last few weeks stands out in sharp contrast to other sectors of the funding market, particularly repo. Under last year’s defiling paradigm, such a collateral shortage as pronounced as what we see now would have been disastrous for gold prices (more collateral demand typically leads to an increase in gold “leasing”, which [...]
Just a few weeks ago I went through the repo and credit markets with the idea that tapering QE was an act of necessity rather than convenience. Again, the orthodox practitioners at the FOMC will proclaim the economy healed when it clearly is not (an economy does not simply contract 3% and then go on its merry way) to set [...]
I don’t want to devolve into a Clintonian argument over the basic meanings of certain words, but that may be the best course in analyzing and discussing Europe’s circumstances in the very new age of negative interest rates. Reuters says there is “clear proof” that Draghi’s desperation and new bluff is “gaining traction.” An all-time low for euro zone money [...]
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