Earlier in the year, China was the primary topic of conversation as its economy teetered upon the precipice of the great unknown, growth less than the “minimum”, while corporate defaults suddenly became somewhat contagious. At the time, monetarists globally were unconcerned despite the outward projection of a high degree of disorder because they “knew” the PBOC was “in control”, going [...]
The positive price action in gold of the last few weeks stands out in sharp contrast to other sectors of the funding market, particularly repo. Under last year’s defiling paradigm, such a collateral shortage as pronounced as what we see now would have been disastrous for gold prices (more collateral demand typically leads to an increase in gold “leasing”, which [...]
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 [...]
The explanation given for the increase in participation at the reverse repo “window” in mid-April was taxes. In other words, the payment of quarterly and annual estimates and billings reduced the need for the federal government to borrow. Since the variability in borrowing amounts is taken up in t-bills, the relative scarcity of on-the-run t-bills has left the market somewhat [...]
Apparently the stasis that has infected credit markets has been visited upon gold prices. Going back to late March, gold has straddled the $1,300 level without straying too far on either side. As with other credit market prices, such stability is conspicuously different from what would be considered “normal” market behavior. Is it possible the two opposing forces affecting gold [...]
A recently issued report from the World Gold Council surmised that it was “feasible” for as much as 1,000 tons of physical gold to have become entangled with financing deals in China last year. That would/might account for some portion of the physical metal that has moved East in recent years, as metal inventory has long been a popular staple [...]
Even though the data is stale by the time of its eventual release, I think the TIC figures still maintain some relevance. If nothing else, even on a rear-facing basis, it provides more consistent data to confirm or deny previous narratives. To this point, that description includes central banks mobilizing dollar assets to deflect continuous dollar funding difficulties. The February [...]
The latest money growth figures from China seemed to have brought back worries over more disorder in finance. Tomorrow the Chinese government will release GDP figures for the first quarter and current expectations (I know) are for 7.3% Y/Y growth. That would be the slowest rate of expansion in memory. The two are inextricably linked as slowing growth, including the [...]
The news from China this morning was unexpected only to those who still cling to the idea that the PBOC control is omnipresent. Exports were down 6.6% Y/Y in March (after dropping 18.1% Y/Y in February), while imports simply collapsed 11.3% Y/Y. Since China has been operating as the global trade pivot, the results on both sides of the trade [...]
The word decoupling has made a comeback in recent months. In 2008, it was believed that the world would be able to withstand a slowdown in US growth, as global markets would “decouple” from the primacy of US consumers. In some ill-conceived instances, it was even argued that financial markets would as well. Of course, we know that the interconnected [...]
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