liquidity

The Frights of Repo-ween: Technical Things and Scaredy-cats

By |2019-10-31T20:50:18-05:00October 31st, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s not the level of bank reserves. It never was. QT was always a distraction. As I’ve said from the very beginning, the same thing the Fed’s researchers (rather than top policymakers) will say you if you ask them, the level of bank reserves only tells us what the Fed is doing. It does not, [...]

There’s No S-L-R In R-E-P-O

By |2019-10-29T20:18:14-05:00October 29th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

JP Morgan’s CEO Jamie Dimon has been running around Washington claiming that mid-September’s repo rumble was the result of the post-crisis regulatory environment. He now says that his bank had the spare cash and was willing to cash in on double digit repo rates but it was government rules which prevented that from happening. It’s [...]

The Spread of Collateral, Credit, and Spreads

By |2019-10-23T18:28:15-05:00October 23rd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When we talk about money dealers (not just primary dealers) and liquidity, we aren’t just zeroing in on the repo market. Money market conditions such as what we can observe in the part of the global repo market that ends up hitting the tape can be helpful in assessing overall liquidity. It isn’t, however, the [...]

Tidbits Of Further Warnings: Houston, We (Still) Have A (Repo) Problem

By |2019-10-16T18:27:01-05:00October 16th, 2019|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Despite the name, the Fed doesn’t actually intervene in the US$ repo market. I know they called them overnight repo operations, but that’s only because they mimic repo transactions not because the central bank is conducting them in that specific place. What really happened was FRBNY allotting bank reserves (in exchange for UST, MBS, and [...]

Head Faking In The Empty Zoo: Powell Expands The Balance Sheet (Again)

By |2019-10-08T18:51:40-05:00October 8th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

They remain just as confused as Richard Fisher once was. Back in ’13 while QE3 was still relatively young and QE4 (yes, there were four) practically brand new, the former President of the Dallas Fed worried all those bank reserves had amounted to nothing more than a monetary head fake. In 2011, Ben Bernanke had [...]

The Wholesale Zoo: Where Did All The Animals Go?

By |2019-09-30T18:58:19-05:00September 30th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

One of the most maddening aspects of the recent repo market, federal funds mashup is the lack of context behind it. The event is being characterized and described as if in isolation. Regulations are squeezing dealers at the same time there is a lack of bank reserves. Thanks to QT, there’s just not enough liquidity [...]

Sizing Up the Cavalry

By |2019-09-25T18:39:57-05:00September 25th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There’s been an unusual level of honesty coming out of Liberty Street of late. Not total honesty but certainly more than the usual nothing denials and dismissals. If you don’t immediately recognize the reference, that’s the street in NYC where FRBNY and its Open Market Desk resides. What is supposed to be the moneyed centered [...]

The Fingerprints of Bumbling (China)

By |2019-08-21T17:46:46-05:00August 21st, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For a cabal of superpatient supergeniuses, the Chinese tend to play with fire quite often. According to many, the Communists have perfected the art of technocracy and are merely waiting out the impetuously free West. The dollar system will destroy itself (there’s the kernel of truth) allowing a perfectly positioned China to swoop in and [...]

China Repo: Vulnerability or Bottleneck, Risk Aversion and Collateral

By |2019-08-12T16:41:07-05:00August 12th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Toward the end of June, Chinese RMB money markets seemed like they had weathered the worst of it. One month earlier, in late May, regulators had seized Baoshang Bank Co. sending waves of uncertainty rippling through markets in China and around the world. Authorities were quick to declare “nothing to see here”, blaming the bank’s [...]

Chart(s) of the Week: You Were Saying Rate Cut?

By |2019-08-02T16:48:31-05:00August 2nd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

We’ve got repo, erratic federal funds market, German 2s correlated with it, plunging bond yields, angry swaps (IR and FX), and economic data increasingly and more speedily in the wrong direction. Overseas official entities piled even more into the foreign repo pool, their payments dollar buffer, another definitive sign of a much more acute dollar [...]

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