There are three things the markets have going for them right now, and none of them have anything to do with the Federal Reserve. More and more conditions resemble the early thirties in that respect, meaning no respect for monetary powers. This isn’t to say we are repeating the Great Depression, only that the paths available to the system to [...]
The front end of the yield curve is flattened out near enough to zero. While the bill yields I noted this morning did not finish the day session with a negative, they were close and several have traded that way in the after hours session (as of this writing, the benchmark 3-month bill is -1 bps). This thing doesn’t end [...]
These numbers are essentially meaningless. They aren’t completely devoid of content, of course, just that such substance is of limited use. The Chinese have confirmed that their economy had shut down in the January-February period. The estimates for the Big 3 accounts were way below any and every consensus, thus demonstrating the severity of the disruption. First, the figures: Industrial [...]
Is the dollar rising, or falling? Does it matter? In one sense, obviously it does. The way in which the dollar behaves dictates how everything else goes. The potential mix-up and confusion start when we have to define exactly what we mean by “dollar.” Or rising. The rising dollar doesn’t always rise. If we are talking about the US currency’s [...]
The 3-month Treasury bill’s equivalent yield has plunged, absolutely plunged. It was 1.45% last Thursday. Today? All of 45 bps. A one-hundred bp drop in six trading sessions. One hundred. Six days. Rate cuts, right? Sure, that’s the premise. Like eurodollar futures, the front end of the yield curve is saying that there are more of them coming. The Fed’s [...]
The Federal Reserve has been trying to propagate two big lies about the economy. Actually, it’s three but the third is really a combination of the first two. To start with, monetary authorities have been claiming that growing liquidity problems were the result of either “too many” Treasuries (haven’t heard that one in a while) or the combination of otherwise [...]
Taking another look at what I wrote about repo and the latest developments yesterday, it may be worthwhile to spend some additional time on the “why” as it pertains to so much determined official blindness, an unshakeable devotion to otherwise easily explained lunar events. The short version: monetary authorities as well as the “experts” describe almost perfectly risk averse behavior [...]
It’s interesting what the eurodollar futures curve has done today. Over the past several weeks, of course, the curve has collapsed though with much more focused buying at the front end of it. That’s understandable given the common scenario being priced in – that the Fed will reluctantly be forced into sizeable rate cuts very soon. In fact, the current [...]
With interest rates tumbling all over the world, gold should be killing it. Instead, gold is getting killed. The major correlation for this precious metal has been the bond market, falling yields. And that makes intuitive sense; gold as a hedge pays no interest, but if competing safety instruments like UST’s end up paying up a lot less then gold [...]
Germany’s Finance Minister Olaf Scholz ignited and invited controversy today when he signaled that the federal government is looking at a possible suspension to constitutional budget measures. With a nasty political fight certain to follow, even temporarily adjourning the country’s so-called debt brake would not be easy. With Chancellor Angela Merkel’s party already in a precarious position, one might wonder, [...]
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