What is the yield curve supposed to look like? It’s a simple question that doesn’t actually have an answer. And because it doesn’t, there is a whole lot of confusion about bond yields. To wit: Chadha, the chief global strategist at Deutsche Bank’s U.S. securities unit, is part of a group of die-hard bond bears who say Treasuries have become [...]
Writing earlier this year on the topic of the Fed’s future balance sheet reductions, Ben Bernanke had occasion to recount his experience from 2013. It was a stressful time for the Fed after they panicked into QE3 (and then QE4) and then almost panicked right out of it. The then-Fed Chairman stressed from his experience the importance of communications as [...]
When looking at the bond market or eurodollar futures, both tugged by JPY, I don’t think it was just the payroll report that pushed new levels of anti-reflation today. Instead, there is too much that is consistent with a weak payroll report, and by that a mean a string of them. Yesterday, for example, automakers released their sales estimates for [...]
For once, it does seem like the FOMC was asking of its members the right question. They spent years incredulous over the lack of effect due to whatever of the multiple QE’s without changing expectations. No matter how little evidence for their initial let alone ongoing success, they would always, always keep up the “recovery is coming” narrative. In many [...]
I don’t pay much attention to the 2 year part of the UST curve because I think it is susceptible to information spoilage, distortions that aren’t strictly related to what a “risk-free” 2s should tell us. But as my colleague Joe Calhoun often reminds me, just because I don’t think it as important doesn’t mean that other people see in [...]
TIC data confirms that “reflation” captured more than just pricing sentiment. It appears to have occurred in bank balance sheet activity, and related official sector UST transactions. As to the latter, official holdings of US$ assets did decline on net in March 2017, the latest figures, including more selling of UST’s. The scale of the decline was less than we [...]
As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs. It has been this way from the beginning, even before [...]
I don’t think Milton Friedman would have made much of chess player. For all I know he might have been a grand master or something close to that rank, but as much as his work is admirable it invites too the whole range of opposite emotion. He was the champion libertarian of the free market who rescued economics from the [...]
Closing the book on Q4 2016 balance sheet capacity is to review essentially forex volumes. The eurodollar system over the last ten years has turned far more in this direction in addition to it becoming more Asian/Japanese. In fact, the two really go hand in hand given the native situation of Japanese banks. As expected, data compiled by the Office [...]
In a world where everything is transitory, nothing is. The FOMC in its latest statement referred to that word yet again. As always, the context is weakness. But if such is always unexpected yet occurring, even if temporary, “transitory” doesn’t apply. Yet we go through the ritual each time anyway. The last (March) statement read: The Committee expects that with [...]
Stay In Touch