Repo

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

By |2019-10-31T20:50:18-04:00October 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 |2019-10-29T20:18:14-04:00October 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 [...]

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” [...]

Collateral Reserves: What Is Behind Record Low and Negative Yields

By |2019-08-19T17:40:52-04:00August 19th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It was truly startling when it was announced. The second and more dangerous phase of the Global Financial Crisis had begun on July 15, 2008. Within two weeks, Merrill Lynch had etched its name on the growing list of “troubled” institutions. On July 28, 2008, Merrill Lynch agreed to sell $30.6 billion gross notional amount [...]

China Repo: Vulnerability or Bottleneck, Risk Aversion and Collateral

By |2019-08-12T16:41:07-04:00August 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 [...]

Maybe The Grand Celebration For The Early End of QT Starts Tomorrow?

By |2019-07-31T18:13:09-04:00July 31st, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Perhaps too much attention was given to “one-and-done”, the knee-jerk disappointment over what everybody is saying was not enough “dovishness.” And while that may have been true as it relates to main star of the puppet show, rate cuts, the FOMC actually did deliver better theater at least with a secondary character. The latest official [...]

Ticked About TIC: The Accidental Discovery of Perhaps The Big Bottleneck

By |2019-07-17T15:30:38-04:00July 17th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

From October 2000 to July 2001, the Treasury Department conducted a special survey of users of its Treasury International Capital (TIC) data. Nearly two decades ago, it had become apparent (to some) just how important international dollar flows were to the overall economic and financial landscape. And not just those of the United States. TIC [...]

What Has Markets Spooked? Probably Something To Do With That Huge Offshore Dollar Hole

By |2019-07-12T18:32:36-04:00July 12th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Like a shark smelling blood in the water, I don’t care that the blood is in the water from leaking out of what will be a dead horse, if it isn’t deceased already. I pretty much intend to beat on it one way or another. The issue isn’t just fed funds, it’s why anyone cares [...]

Dollar Destruction Potential: From China ‘Outflows’ To The FOMC Considering QE5

By |2019-07-10T17:53:14-04:00July 10th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Tucked away in a quiet little corner of the BIS publication library, a study was published in the organization’s September 2015 Quarterly Review. One of the biggest mysteries of that time was Chinese “capital flight.” It was breathtaking, and it would only get worse. What was really going on? Many if not most mainstream stories [...]

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