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Embroiled by Fed Funds, FRBNY 143 Months After BNP Finally Says ‘Offshore’

By |2019-07-09T16:07:38-04:00July 9th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It was a poignant moment that has gone totally unappreciated. Lost in the noise about subprime mortgages, on August 9, 2007, what actually happened that day represented perhaps the best example of how things worked. Or suddenly didn’t. On the occasion of the 10th anniversary, I recounted the tale of BNP Paribas. You’ve heard of [...]

The Only Good From IOER: Teasing Out The Shadow Money Costs That Do Matter

By |2019-04-26T16:57:14-04:00April 26th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

You don’t always have to understand the minute details behind these things to gain a sense of what they mean. I’m talking about things like negative swap spreads and related. From the textbook view, a negative spread makes no sense at all. On the surface, it seems to suggest the market thinks financial counterparties are [...]

What Does It Mean If The Fed Might (Have To) Be Ready To Move Past IOER?

By |2019-03-01T19:33:46-05:00March 1st, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

More than any conundrum in the bond market, the Federal Reserve has one on its hand much closer to home. Its home, anyway. The effective federal funds rate (EFF) has been stapled to IOER for each of the last fifty trading days. No variation whatsoever. EFF had converged with IOER back in October. A lot [...]

The Bookkeeper’s Pen, But Which Bookkeeper?

By |2019-01-11T18:06:21-05:00January 11th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In the chaotic days of the early “recovery”, those opposed to the Federal Reserve’s response largely fell into the wrong camp. The central bank had done too much, they claimed. Never mind how the first global panic in four generations had developed and then crushed the global economy, such deflation was over to be taken [...]