Over the last five weeks, the Federal Reserve has been in crisis mode. As a consequence of all its balance sheet expansions, the expansive alphabet soup of programs, along with QE6, the level of bank reserves has risen by just over $900 billion. That’s the increase leftover for the banking system after everything adds up on the asset side and [...]
With interest rates tumbling all over the world, gold should be killing it. Instead, gold is getting killed. The major correlation for this precious metal has been the bond market, falling yields. And that makes intuitive sense; gold as a hedge pays no interest, but if competing safety instruments like UST’s end up paying up a lot less then gold [...]
Making the rounds on Twitter yesterday (h/t to M. Simmons) was a quote attributed to Minneapolis Fed President Neel Kashkari. I can’t find any confirmation for it so it could be one of those fake news tweet situations. And the only reason I include it here is because it sounds like something he would say; the urge to pile on [...]
As you might imagine, inflation was the hot topic of conversation during the December 2014 FOMC meeting. Having opened up the transcripts for that year to the public last month, we are once more treated to the background behind this theater of the absurd. The final few months of 2014 were when everything came together. For these central bankers, it [...]
While the world tries to digest the latest in geopolitics, as well as guess what could come next with them, on the topic of the economy the TIPS market registered a notable high yesterday. The 5-year breakeven rate, the difference between the “real” yield on the 5-year TIPS and the nominal yield for the 5-year US Treasury Note, was pulled [...]
Federal Reserve policymakers appear to have grown more confident in their more optimistic assessment of the domestic situation. Since cutting the benchmark federal funds range by 25 bps on July 31, in speeches and in other ways Chairman Jay Powell and his group have taken on a more “hawkish” tilt. This isn’t all the way back to last year’s rate [...]
It isn’t inflation which is driving gold higher, at least not the current levels of inflation. According to the latest update from the Bureau of Economic Analysis, the Federal Reserve’s preferred inflation calculation, the PCE Deflator, continues to significantly undershoot. Monetary policy explicitly calls for that rate to be consistent around 2%, an outcome policymakers keep saying they expect but [...]
This is a companion piece to last week's Monthly Macro report found here. The Treasury market continues to price in lower nominal and real growth. The stress, the urgency, I see in some of these markets is certainly concerning and consistent with what we have seen in the past at the onset of recession. The move in Treasuries is by [...]
I see it as reality intruding. The myth of the Fed continues to linger in the popular media, the mainstream press will dutiful parrot the idea that rate cuts and an end to QT are “highly accommodative.” The FOMC told them yesterday what to write and say: These changes in the anticipated path of interest rates have eased financial conditions [...]
I don’t think anyone really noticed the timing because nobody really noticed it had happened. What took place last year qualifies as a big deal in the world of central banking and moneyless monetary policy. The lack of clarity about it as well as what sure looks like indecision portrays an intellectual foundation at odds with public perception. First, the [...]
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