This post is actually a companion to the last, looking into the discrepancy of breakevens with the broader credit market, but I felt it deserved attention all its own. As noted in that prior discussion, there is little indication that credit markets are at all re-evaluating prospects for “inflation” and recovery. If anything, they remain curiously stubborn against it even if [...]
If we have learned anything from this period in economic and financial history, it should have been to take great care when using or expecting past correlations as valid. There are innumerable examples where that dynamic shift applies, but it seems especially relevant at the end of April 2015. The amount of space and pixels dedicated to the idea that [...]
There was no third consecutive quarterly liquidity event on April 15, but I think there was an observation of the same systemic crack that just didn’t, this time, go anywhere. I have been highlighting repo rates particularly during April where GC rates failed to reset as they had done after every other quarterly window dressing. This time was already notable [...]
I think it is interesting that the TIC data also provides some further confirmation about the Swiss participation in the January 15 version of the “dollar” problem. Of course, that still fits with the supercycle decay of the overall eurodollar standard, and even as one of those asymmetries, but I think it deserves its own emphasis. Again, all caveats about [...]
The primary challenge of trying to unravel wholesale finance is the innumerable and often impenetrable layers. Making important distinctions is quite tricky, as you have to account for additional dimensions above and beyond what might pass for reasonable expectations. The repo market offers a good example of that, as you have supply and demand for cash “helping” set the repo [...]
Usually references to April 15 are reserved for income taxes, but in this case that preference may be superseded. Recognizing the illiquidity pattern of the “rising dollar” means being vigilant toward the next expected instance. If October 15 was an “event” followed by January 15 in succession, then it is reasonable to at least anticipate conditions for April 15. To [...]
The emphasis of QE in terms of “portfolio effects” and interest rate “stimulus” is to visit upon the entire curve what monetary policy has done in the past in only the shorter maturities. So the evolution of monetarism under activism and interest rate targeting is to bring the entire curve down whereas before it was content to intrude only in [...]
While the more interesting action has shifted to funding markets, the treasury curve remains at least relevant to the analysis of all those ebbs and flows. For the most part, the yield curve in UST has found itself stuck in a rather tight range right at the bottom of the “cycle.” While that would be noteworthy in one or two [...]
Credit and funding markets have been pretty much defined by “dollar” behavior for most of March in the same manner that defined December and early October. At the outset, it looked as if credit markets had turned the “other” way with interest rates rising and some of the downstream “markets” no longer under such steady pressure. The culmination of that [...]
With the FOMC throwing in the towel on the US “boom”, funding markets have knee-jerked back into the same trends as predominated during the prior liquidity events. In other words, extreme pessimism has once again intruded in eurodollars. The funding curve has exploded (imploded?) back to where it was at the early part of February, when everything was still just [...]
Stay In Touch