The whole point of any “stimulus” is to buy time. The idea is to keep the economy busy or, in the case of more purely monetary policy, happy during that time so that the economy on the demand side can on its own heal. In the parlance of orthodox economics, “stimulus” reduces the output gap, the difference between current output [...]
With JPY pushing above its recent resistance (for whatever might have caused it), it is useful to determine if that is an idiosyncratic change or whether there are other “dollar” indications that support a possible breakout. This is especially true given what I think is causing the move in JPY, namely that “reflation” had been initially predicated on ideas of [...]
In the aftermath of the “rate hike” in December, there was a rush to quantify, as far as expectations of political considerations may be attainable in such format, just how much the Fed would further “hike” in 2017 as a distillation of how good they figured the economy to be. As overall “reflation”, however, that was more of a media [...]
November was the month where global bonds, particularly sovereign bonds, were routed in synchronized liquidation. As such, we would expect to find among various data sources evidence to suggest a monetary “dollar” background consistent with that fact. What that has meant in the months (and last several years) leading up to it was the foreign official sector in overdrive “selling [...]
Then-Federal Reserve Chairman Ben Bernanke testified before Congress on May 22, 2013, that taper was for officials a strong consideration. Though QE4, the UST portion of the restored balance sheet expansion, wasn’t yet six months old and he had promised, sort of, at the start of QE3 that both would be open-ended, sort of, his message to the legislature was [...]
The biggest problem with “reflation” is that it doesn’t live up to what the word is supposed to mean. That has been true in each of the past attempts at it, but is even more the case in this latest one. Yet, to hear it described is as if we are the verge of an explosion in growth unparalleled at [...]
The FOMC minutes published today for the December 2016 policy meeting are being shopped around in much of the mainstream as “hawkish”, or at least a continuation of the “reflation” impulse. The commentary related to the more detailed window into the last monetary policy decision is being framed as if more so to that upside. Policymakers were clear that the [...]
For the most part the “reflation” narrative has focused on nominal interest rates. That, for once, actually makes some sense given interest rates are really at the center of all this. Stocks are whatever they are, but whether you figure the Federal Reserve and monetary policy or just the economic reflections of interest rates, the nominal world does seem to [...]
The Chinese have been undergoing quite a bit of stress lately, with markets including stocks more likely to be in turmoil than not. In fixed income, the Finance Ministry was slightly shaken by a failed auction today, its first since summer 2015. Yesterday, government bond futures trading had to be suspended when the 10s and 5s experienced their largest drop [...]
That the repo market, as noted yesterday, has been beset by a persistent collateral shortage is relatively uncontroversial. Where once large blocks of MBS tranches were central to interbank flow and funding, their absence is still a fact of operation though that repudiation was a very long time ago. Even with that backdrop, however, it doesn’t explain a whole lot [...]
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