According to the TIC estimates, more than half a trillion in UST’s have been perhaps liquidated from foreign official holdings since October 2014. More than half of that total has taken place just in 2016 alone in the eight months through August. And, of course, in that time UST nominal rates have only fallen and sharply so, contradicting the nightmare [...]
In conventional thinking, China’s problems are China’s problems. As those related to its currency, it is believed a mere matter of either intentional policy (devaluation = export stimulus) or the outflow of “hot money” because of China’s unique circumstances. From this position, one populated by policymakers, what has transpired over the past year plus was all very confusing. It is [...]
Woe to the unemployment rate. Without it so much confusion and angst might have been avoided, though admittedly that more realistic view would have been itself darker but at least clear. In August 2014, Federal Reserve Vice Chairman Stanley Fischer unleashed a brief but powerful storm of realism upon the bubble of monetary policy. Perhaps it was because his target [...]
It seems as if Deutsche Bank is on everyone’s mind, even if nobody knows exactly why. Stocks were down today which is really unremarkable but has become so by the standards of just this year where nothing bad is supposed to be able to intrude. That aside, the news from Germany was quite unnerving. Bloomberg reported early this afternoon that [...]
Last April, former Fed Chairman Ben Bernanke wrote a series of blog posts for Brookings that was intended to explain one of the biggest contradictions of his legacy. If quantitative easing had actually worked as he to this day suggests that it did, why wasn’t the bond market in clear agreement? In order to try to reconcile the huge discrepancy, [...]
Though I highly doubt he will admit it, he’s just not the type, even Ben Bernanke knows on some level that bond market is decidedly against him, or at least his legacy. Economists have a funny way of looking at bonds, decomposing interest rates into Fisherian strata. To monetary policy, interest rates break down into three parts: expected inflation over [...]
On August 31, 2008, Germany’s Commerzbank announced that it was purchasing ailing rival Dresdner Bank from Allianz SE. As usual, however, the deal wasn’t described in those terms as nothing ever is so honest in public. Then-Allianz CEO Michael Diekmann said at the time of the announcement: As a strong bank, the new company can safeguard jobs in the long [...]
Perhaps the hardest part of analyzing the eurodollar system is synchronizing all its various dimensions into a common perspective. Coming from the traditional standpoint that views all these various parts as if they are all separate, such a task is often quite difficult. For example, the repo market is almost always described from the cash perspective as if there only [...]
For quite some time now I have been writing (constantly) about “something” going in “dollar” markets and funding markets all over the world. Chinese markets related to “dollars” have been the most prominent in their disorder, but there is a degree of causation that runs from eurodollars to China and perhaps back again. In other words, Chinese illiquidity is not [...]
As noted earlier today, the bond market is not truly a mystery or middle. In very simple terms that even Alan Greenspan might be able to understand, rising inflation and economic opportunity are reflected in higher interest rates and a steeper yield curve; full stop. The bond market, however, does not possess a crystal ball and thus must rely on [...]
Stay In Touch