Rate Cuts Tied To Liquidity, Powell Just Doesn’t Know It Yet
Another discussion with Erik Townsend of MacroVoices about bonds, rate cuts, and what's behind everything this year. https://youtu.be/RvFBkFaPKoY
The 10s Back To A 1-handle Again; New Information That Isn’t New
The benchmark 10-year US Treasury yield closed below 2% for the first time since Donald Trump was elected President. Having flirted with that level several times over the past week, today the most-watched interest rate on the planet finally breached this one startling round number. And it comes during a week which by every conventional account should have been hugely [...]
Toward Rate Cuts: What If The Landmine Was Real?
It was supposed to be the Chinese government who was going to rescue the global economy. Once the rationalizations ended and officials around the world realized there was serious economic weakness building at the end of 2018 instead of a globally synchronized inflationary recovery, the green shoots of 2019 were going to be in one big part a fiscal stimulus [...]
The Speed of Sour: LIBOR Now Inverted, Too
Last week, for the first time since February 2008, the LIBOR curve inverted. The 3-month tenor has been on the move downward for some time. The 1-month rate has been gentler in its slope. Last Thursday, the two finally crossed. As unnatural as inversion in the UST curve or elsewhere, it’s another sign of imminent rate cuts. I am somewhat [...]
Federal Funds Is Not Falling With The Rest of Them
It’s difficult a lot of times to easily and succinctly describe what’s going on inside a monetary system that; 1. Spans the entire world, easily jumping across if not erasing geographical boundaries; 2. Is located in the shadows, leaving us with no direct data or statistics; 3. Often works in a dizzying array of complexities. I have to believe that [...]
Baoshang Isn’t China’s Lehman, So Why Does April 17 Show Up All Over Global Markets?
One month ago, on May 24, Chinese regulators stunned the world by announcing the first bank restructuring in modern China’s history. Based in Inner Mongolia, Baoshang Bank was seized because of what the PBOC and China Banking and Insurance Regulatory Commission said was “severe credit risk.” Initial reports attempted to link Baoshang’s struggles to financier Xiao Jianhua who disappeared in [...]
Globally Synchronized (Bond Yields)
If you have nothing left, it can sound like a winning argument but you have to really try hard enough. In October 2015, with another false dawn dawning on the public, former Federal Reserve Chairman Ben Bernanke wrote and op-ed published in the Wall Street Journal. As had become his habit, it was full of praise – for his own [...]
Powell Surrenders: I Told You Last Year It Was A Lie; Or, Here’s Almost The Whole Of It
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 [...]
TIC Reveals The Landmine; This Time Is Already Different
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 [...]
Eurodollar University: Call For Papers
It comes down to a choice, really: find an alternative to Economics (capital “E”), or give Economics an alternative. The former may be necessary over time, a luxury we don’t really have. The latter, however, requires a sufficient number of open-minded participants already inside the intellectual fortress. Enough of a critical mass who realize despite all the R* and term [...]
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