A dead rat would’ve easily explained the foul odor, though it wouldn’t have ended the matter. The smell was real, the cause still yet to be identified in the mainstream view. For the bond market, anyway, it was a process of discovery which began with an unexpected stench of something much bigger and more profound than any single or simple [...]
This goes back to the earliest days of the Federal Reserve. In 1912 and even before, in order to sell the skeptical public on another central bank – the nation’s third, and first in three-quarters of a century - in what was already going to be an uphill battle, Congress demanded that this thing be called something other than a [...]
Treasury Secretaries, like Federal Reserve Chairmen, they don’t talk much about or pay much attention to the market’s need for collateral. They may pay some, but not specifically collateral if only under the vaguely defined category of “market consideration” when setting auction supply. Collateral shortages have come and gone, however dreadful, never eliciting a direct response insofar as supply has [...]
The US Treasury Department announced today that it has completed an auction of 20-year bonds. Quite unlike the one 7s auction – you know, that one – this particular bond sale was positively uninteresting. Like all the rest of the bills, notes, and bonds since February 25, there an overwhelming number of bank dealers and other participants some of whom [...]
The benchmark 10-year US Treasury has obtained some bids. Not long ago the certain harbinger of bond rout doom, the long end maybe has joined the rest of the world in its global pause if somewhat later than it had begun elsewhere (including, importantly, its own TIPS real yield backyard). Even nearer-in inflation expectations have rounded off at their current [...]
When the 4-week Treasury bill equivalent yield traversed the so-called RRP “floor” back in 2017, hardly anyone noticed. With rates nominally rising due to the Federal Reserve’s historically dovish hawkish normalization push, it was all a jumbled mess. What if the 4-week bill rate (or 3-month) was somewhat less than this RRP thing-y, they were all moving anyway.Even as the [...]
Oh, the irony. Recall Janet Yellen’s plight, circa early 2015. Oil prices were “unexpectedly” crashing raining on her recovery-like parade. The Federal Reserve, Yellen as its Chairman, was about to embark on an ambitious program of regular every-meeting rate hikes to head off, its models assumed, the coming inflationary bump which was to confirm full if belated monetary policy success. [...]
Investors like to short bonds, even Treasuries, as much as they might stocks and their ilk. It should be no surprise that profit-maximizing speculators will seek the best risk-adjusted returns wherever and whenever they might perceive them. If one, or a whole bunch, has to first “borrow” a security the one doesn’t own in order to sell something at a [...]
Brazil’s stock market was rocked yesterday by politics. The country’s “populist” President, Jair Bolsonaro, said he was going to name an army general who had served with Bolsomito (a nickname given to him by supporters) during that country’s prior military dictatorship as CEO of state-owned oil giant Petróleo Brasileiro SA. Gen. Joaquim Silva e Luna is being installed, allegedly, to [...]
With the UST yield curve currently undergoing its own market-based twist, it’s worth investigating a couple potential reasons for it. On the one hand, the long end, clear cut reflation: markets are not, as is commonly told right now, pricing 1979 Great Inflation #2, rather how the next few years may not be as bad (deflationary) as once thought a [...]
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