Having past the fifteenth of the month, the first month in the new quarter, the repo “cycle” for the quarter end has completed. Repo rates have followed almost exactly the same pattern as three months earlier, pivoting on both the quarter end and the 15th each time. This is not just unusual, it shouldn’t happen. Compared with other quarter-end periods, [...]
The latest update for TIC “flow”, for the month of May, was mostly what was expected given the “dollar pause” at that time. Central banks were still active but not nearly as engaged as they had been through the worst parts of the “dollar” crisis in late 2014 and early 2015. Official accounts (central banks and foreign governments) had turned [...]
Where money markets seem to be regularly unsettled, credit markets are quite the opposite. Those two polar interpretations may, in fact, be quite related as credit markets are not really supposed to be so placid. Yet, here we find them again lacking much determination in any one direction. Inflation breakevens which were steadily rising from January 15 to May 6 [...]
The US Treasury Dept. released its awaited report on October 15 today. I started to read through its 72 pages but it became clear rather quickly this wasn’t anything but, frankly, junk. The ultimate message is simply one of “computers.” In other words, there is no discussion, apart from simple bland references here and there, about what really transpired on [...]
There is little doubt now that the “dollar” is wreaking havoc upon the global financial complex. Commodities are being battered almost everywhere, and in a manner not seen since the last version of “dollar” trouble prior to the March 18 FOMC “dovishness.” This time, however, there is almost nothing of monetary policy in the moves, just plain and pure uncertainty [...]
The June FOMC statement has done nothing to clear up any suspicions in either direction for credit markets. I think that is actually consistent, in an irrational way, as the FOMC tries to labor under the delusion of recovery, which these “markets” are bound to at least consider, while all good sense says there is none. The result is markets [...]
At first glance, the TIC view of the global “dollar” short was quite placid in April. That makes some sense given that the March 2015 FOMC meeting has been established as a durable inflection in the outward projection of “dollar” funding. The flow direction, at least among what are listed as “private” sources, would seem to conform to that interpretation. [...]
The main thing about “tail events” is how unconventional they can be, a tautology that somehow is necessary. When taking account of financial risks in 2015 it is almost convention that there are bubbles, with rather unnerving complacency about it all. That suggests in some ways the whole idea of bubbles has changed since the first one under eurodollars showed [...]
Yesterday I looked at funding markets and currency proxies for detecting the end to the “dollar” pause that began on March 18. Broader credit markets agree with that assessment so far, as nominal yields and the UST curve shape have started, at least, to be redrawn back into the tightening format. Nominal yields and inflation breakevens turned right at May [...]
Nobody really knows what is going to happen as Greece disproves all the narratives about the ECB’s ability to actually fix anything. As with all things monetarism, the attempts of liquidity were really about time rather than dissuading imbalances. But the funny thing about trying to buy time is that it so often removes the very pressure necessary to instill [...]
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