The BLS said today its Consumer Price Index rose by 6.2% in October 2021 when compared to October 2020. This was the largest annual increase since Alan Greenspan was giving up on M2 three decades ago. Perhaps most concerning, after having taken a few months “off” prices re-accelerated last month reigniting fears of a 70s-style monetary runaway.But, as we saw [...]
Have hedge funds acted rashly, perhaps stupidly? There is a segment of the population media that very much wants people to think so. According to recent data, fund speculators have gone long short-term US Treasuries, particularly the 2-year (as well as eurodollar futures), since early October. And not just long the short end, the most in almost seven years!What idiots, [...]
Jay Powell and his group have been talking taper for months. The build up has been excruciating to some, if only because this central banker adjustment is supposed to mean something. Something especially big specially to bonds who just can’t thrive, everyone says, without the “monetization” of QE. With first less and then no Fed, who will buy them? Too [...]
Why always round numbers? Monetary policy targets in the post-Volcker era always change on even terms. Alan Greenspan had his quarter-point fed funds moves. Ben Bernanke faced with crisis would auction $25 billion via TAF. QE’s are done in even numbers, either total purchases or their monthly pace.This is a messy and dynamic environment, in which the economy operates out [...]
Bring on the tantrum. Forget this prevaricating, we should want and expect interest rates to get on with normalizing. It’s been a long time, verging to the insanity of a decade and a half already that keeps trending more downward through time. What’s the holdup? You can’t blame COVID at the tail end for a woeful string which actually dates [...]
Treasury Secretary Janet Yellen hasn’t just been busy hawking cash management bills, her department has also been filling back up with the usual stuff, too. Regular T-bills. Going back to October 14, at the same time the CMB’s have been revived, so, too, have the 4-week and 13-week (3-month). Not the 8-week, though.Of the first, it’s been a real tsunami [...]
A couple of weeks ago the 10-year Treasury note yield rose 16 basis points in the course of 5 trading days. That move was driven by near-term inflation fears as I discussed last week. Long-term inflation expectations were and are well behaved. I wrote nearly 2000 words last week about that change in inflation expectations and I'm so glad you [...]
In a very real sense, neither the current rate of PCE Deflator “inflation” nor any more expected to be added by the reported LABOR SHORTAGE!!! are what’s pushing the Federal Reserve toward its next taper error. The Fed doesn’t do money, so that’s not an option for them by which to set policy parameters. All that’s left, then, is “expectations.”Jay [...]
Over the past week and a half, Treasury has rolled out the CMB’s (cash management bills; like Treasury bills, special issues not otherwise part of the regular debt rotation) one after another: $60 billion 40-day on the 19th; $60 billion 27-day on the 20th; and $40 billion 48-day just yesterday. Treasury also snuck $60 billion of 39-day CMB’s into the [...]
Extraordinary times call for extraordinary commitment. I never set out nor imagined that a quarter century after embarking on what I thought would be a career managing portfolios, researching markets, and picking investments, I’d instead have to spend a good amount of my time in the future taking apart how raw economic data is collected, tabulated, and then disseminated. Yet [...]
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