There is so much about the repo market that gets lost in the minute details that are more often than not counterintuitive. It can sometimes be confusing as to why counterparties might be willing to pay you to borrow their cash, which is what a negative repo rate actually indicates. In that situation, which is what we are talking about [...]
While the credit markets were looking elsewhere these past few weeks, funding markets are again off their axis as repo fails spiked significantly one more time. The current level of fails is not quite that of June, but it is enough to engender some more pause about financial plumbing. For the most part, explanations have been offered on the supply [...]
Just a few weeks ago I went through the repo and credit markets with the idea that tapering QE was an act of necessity rather than convenience. Again, the orthodox practitioners at the FOMC will proclaim the economy healed when it clearly is not (an economy does not simply contract 3% and then go on its merry way) to set [...]
As much as overseas markets, particularly emerging, have come roaring back in a lot of places, there is still palpable unease in dollar allocations. That is as much expected as any kind of erosion or dysfunction will take a meandering course of ebbs and flows. But I am a little surprised at how easy the concerns of last year have [...]
For my mind there are two actual explanations for tapering QE, neither of which follows the mainstream idea that the economy has gained sufficient “footing.” That provides the cover by which QE’s taper can be sold while preserving “credibility”, but it does not line up with anything else outside of the straightest line in the Establishment Survey. Instead, tapering is [...]
It is exceedingly difficult to interpret the data in any other manner. That is bolstered greatly by reality of the post-taper environment, where issuance has declined dramatically. Yet, it was the talk of taper originally that set that decline in motion, echoing the feedback effects of this “extraordinary” monetary intrusion. Since Bernanke’s QE3 promise back in September 2012, repo volumes [...]
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