german bunds

The Shock, The Squeeze, and The Downside

By |2019-08-28T11:39:46-04:00August 28th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Yesterday, Eurostat confirmed that German GDP in Q2 2019 had contracted. Also issuing benchmark revisions, the European government agency found that GDP growth had been slightly better than previously thought at the top of Reflation #3. The last two quarters of 2017 saw the biggest upward revisions. But if Europe’s “boom” really was a little [...]

Germany’s Superstimulus; Or, The Familiar (Dollar) Disorder of Bumbling Failure

By |2019-08-21T11:37:16-04:00August 21st, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand. [...]

Eurodollar University: Diagramming Repo Reserves And Negative Yields

By |2019-08-20T18:54:38-04:00August 20th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Following up on yesterday’s look at the concept of repo reserves. These are, as hopefully that narrative retelling established, very different from the inert byproducts of QE; or, bank reserves. The explanation for record low and negative yields amounts to a pretty intuitive process, though in practice it is incredibly complex. Sovereign bonds as “pristine” [...]

Factoring the Lumps in the (global) Slump

By |2019-08-09T19:15:28-04:00August 9th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The British manufacturing sector pulled the English economy into contraction for the first time since 2012. Real GDP declined by 0.2% Q/Q in the second quarter of 2019, another minus sign to add to the growing global list. Goods production fell sharply, down 2.3% in Q2 from Q1. It was the biggest decline since 2009. [...]

Yield Plunge: Running Out of Dollars, and Excuses

By |2019-08-05T17:56:07-04:00August 5th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

As of today’s close, there are only 22 trading days in the entire history of Japan’s government bonds (JGB) where the yield (or “yield”) on its 10-year paper has been more negative. Those 22 all came clustered together in June and July 2016. In other words, Japan’s bond market is today comparable only to that [...]

Real Liquidity Cuts Across Many Boundaries; So Does The Lack of It

By |2019-08-02T12:59:58-04:00August 2nd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Things that happen in one place happen in every place. That’s been the second hardest thing to get people to realize. The first is that central banks are not central. And the reason they aren’t is because of this other factor. It truly is a global system and it’s made that way by its very [...]

A Trickle of Belgian Colored Deutsche Bank Speculation

By |2019-07-09T19:17:28-04:00July 9th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In October 2011, the bank’s Chairman bristled at the characterization. His was not going to be a “bad bank” as many in the financial media had been saying. Pierre Mariani, chief executive of Belgium’s Dexia, preferred instead to call it the “residual bank.” No matter the label, the firm was being bailed out for the [...]

The 10s Back To A 1-handle Again; New Information That Isn’t New

By |2019-07-02T18:45:41-04:00July 2nd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The benchmark 10-year US Treasury yield closed below 2% for the first time since Donald Trump was elected President. Having flirted with that level several times over the past week, today the most-watched interest rate on the planet finally breached this one startling round number. And it comes during a week which by every conventional [...]

TIC Reveals The Landmine; This Time Is Already Different

By |2019-06-18T16:34:52-04:00June 18th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I’ve been writing since October when China reopened from that month’s Golden Week holiday that big dollar problems were imminent. You needn’t have taken my word for it, the PBOC said as much. Not directly, of course, but in interpreting the central bank’s anticipated behavior left little doubt.  Over the next few months, more and [...]