From October 2000 to July 2001, the Treasury Department conducted a special survey of users of its Treasury International Capital (TIC) data. Nearly two decades ago, it had become apparent (to some) just how important international dollar flows were to the overall economic and financial landscape. And not just those of the United States. TIC was created ostensibly to aid [...]
Like a shark smelling blood in the water, I don’t care that the blood is in the water from leaking out of what will be a dead horse, if it isn’t deceased already. I pretty much intend to beat on it one way or another. The issue isn’t just fed funds, it’s why anyone cares about that market at all [...]
Jay Powell has had his mind changed for him. Why? Not even a year ago he was downplaying things like federal funds. The rise in that one anachronistic rate was inconsistent with a healthy financial system poised for the good times that come with serious economic acceleration. Quite the opposite, actually. To dismiss the obvious contrary signal, in very place [...]
I’ve been writing since October when China reopened from that month’s Golden Week holiday that big dollar problems were imminent. You needn’t have taken my word for it, the PBOC said as much. Not directly, of course, but in interpreting the central bank’s anticipated behavior left little doubt. Over the next few months, more and more it seemed as if [...]
In case you missed it, the rate cuts have already started. They actually began last year among the major economies in India. If we are counting only DM countries, then Australia and New Zealand are first out of the gate; the latter smaller country beating the larger former by around a month. In a way, it is fitting how even [...]
Perhaps it shouldn’t come as a surprise. After all, during the first quarter of this year several key banks announced they had had enough. Goldman Sachs, Nomura, Credit Suisse, as well as others, they all broadcast cuts to key operations. The FICC stuff, or bond trading to put it euphemistically. The very place the world actually gets dollars. Only, they [...]
The rest of the TIC data was relatively straightforward, at least in viewing it as a proxy for monetary conditions offshore (spilling over, as EFF, onshore). Through February 2019, the usual: shortage of balance sheet capacity, banks cutting back cross-border US$ liabilities (except for resales), foreigners selling US$ assets as a consequence. The official sector selling the most and most [...]
They said May 29 was Italians. I say it was collateral. Offshore repo collateral, to be specific. Because we keep seeing May 29 show up everywhere, what happened that day matters. Getting the story straight allows us to properly analyze the craziness in between then and now. From that, we hope to get a better sense of what comes next. [...]
To most people, this inflation business seems pretty silly. There are those who argue that any inflation index whether the CPI, PCE Deflator or some other approach yet to be devised can accurately capture the concept. And they are absolutely right to question the enterprise. Most people feel inflation in the things they do most; food, health insurance, the cost [...]
Even on a six-month cumulative basis, it is rare to find a negative number. These are reserved for the big ones, the market-shaking events that either perform an inflection or confirm one as it reaches pretty hard depths. The world being the way that it is, you just don’t see the whole forced into outright selling (on net) US$ assets. [...]
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