Three relatively quick observations surrounding today’s UST selloff.1. The intensity. Reflation is the underlying short run basis, but there is ample reason to suspect quite a bit more than that alone given the unexpected interruption in Fedwire yesterday.At 12:43pm EST, most of FRBNY’s electronic services experienced an as-yet unexplained problem which interrupted service, including that of Fedwire. To this point, [...]
Sell-off. No, rout. Heck with that, Armageddon! It really had been that hysterical at times, and not just because it was declared a foregone conclusion. Certainly a big part of it, the faux certainty, more than that the gross overhyping of what really had been a relatively small change; the whole mainstream was afire with an inflationary mountain fashioned from [...]
Last week was only four days due to the President's day holiday but it was eventful. The big news of the week was the spike in interest rates, which according to the press reports I read, "came out of nowhere". In other words, the writers couldn't find an obvious cause for a 14-basis point rise in the 10-year Treasury note [...]
Tomorrow represents the 6-month mark for the Treasury market. On August 4, 2020, nominal benchmark 10-year yields declined to their absolute closing lows. Over the half-year since, rates have generally been on the rise which should be a long enough period by which to categorize our interpretations of what it all means.Most mainstream commentary places any upward trend (of any [...]
Is there a difference between inflation or reflation, and whatever this is? Not mere semantics, it may be everything for what the future ultimately looks like. Yet, the only one ever talked about is the first, as if a foregone conclusion. Why?We’re conditioned to believe in only one or the other, recession still contracting or otherwise total recovery, on top [...]
It was only three years ago, so you’d think narratives today would at least try to account for relevant recent history. If that prior first fit of inflation hysteria had a birthdate, it would’ve probably been December 18 or 19, 2017. On the former, the US House of Representatives passed their version of the Tax Cuts and Jobs Act (TCJA); [...]
The Presidential election was supposed to have been a big one. Yields were low, or high, based on how whichever expert or financial media article was interpreting the manner of trading in bond markets. You could take your pick; a “blue wave” was bad, as in BOND ROUT!!! due to inflation and potential for even more (how?) spendthrift ways in [...]
What’s interesting about vaccine-phoria is that it’s largely been contained to just the one part of the bond market. Nominal Treasury yields at the long end have surged, while those at the shorter end have moved up a bit, too. Predictably, the calls for the BOND ROUT!!!! have grown, typically referencing the guaranteed end of the so-called 40-year bond “bull.” [...]
The primary reason for that first rate hike in a decade in December 2015 was ferbus figuring that full employment had probably been reached, certainly close to where the unemployment rate had fallen at that time. The Fed’s main econometric model calculated this key economic level at between 4.8% and 5.0% unemployment; the actual rate for that month hit five [...]
You pick up a newspaper (metaphorically, hardly anyone does this literally anymore) and you’d be left with the impression the year is 1979 again. Forget 2017; that was child’s play, more like 1968 in the mainstream imagination. October 2020 is going to mark the beginning of the biggest one in decades. Any day now.Inflation, of course. The Fed, the media [...]
Stay In Touch