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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 Consequences Of ‘Transitory’

By |2019-10-07T17:31:17-05:00October 7th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Europe’s QE, as noted this weekend, is off to a very rough start. In the bond market and in inflation expectations, the much-ballyhooed relaunch of “accommodation” is conspicuously absent. There was a minor back up in yields between when the ECB signaled its intentions back in August and the few weeks immediately following the actual [...]

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 [...]

Waiting on the Cavalry

By |2019-09-24T19:34:00-05:00September 24th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Engaged in one of those protectionist trade spats people have been talking about, the flow of goods between South Korea and Japan has been choked off. The specific national reasons for the dispute are immaterial. As trade falls off everywhere, countries are increasingly looking to protect their own. Nothing new, this is a feature of [...]

More Than A Decade Too Late: FRBNY Now Wants To Know, Where Were The Dealers?

By |2019-09-23T18:03:11-05:00September 23rd, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I’ve said it all along; focusing in on bank reserves would leave you dazed and confused. It’s just not how the system works. After all, as I pointed out again not long ago, “our” glorious central bank had the audacity to claim that there were “abundant” reserves during the worst financial panic in four generations. [...]

No Longer Hanging In, Europe May Have (Been) Broken Down

By |2019-09-23T16:57:03-05:00September 23rd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Mario Draghi can thank Jay Powell at his retirement party. The latter being so inept as to allow federal funds, of all things, to take hold of global financial attention, everyone quickly shifted and forgot what a mess the ECB’s QE restart had been. But it’s not really one or the other, is it? Once [...]

Stuck at A: Repo Chaos Isn’t Something New, It’s The Same Baseline

By |2019-09-16T18:15:23-05:00September 16th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Finally, finally the global bond market stopped going in a straight line. I write often how nothing ever does, but for almost three-quarters of a year the guts of the financial system seemed highly motivated to prove me wrong. Yields plummeted and eurodollar futures prices soared. It is only over the past few weeks that [...]

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