us treasuries

Three (Rate Cuts) and GDP, Where (How) Does It End?

By |2019-10-30T20:31:45-04:00October 30th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve has indicated that it will now pause – for a second time, supposedly. Remember the first: after raising its benchmark rates apparatus in December while still talking about an inflationary growth acceleration requiring still more hikes, in a matter of weeks that was transformed into a temporary suspension of them. Expecting the [...]

Simple Payrolls Right Now, Before Getting To The More Complex Issues

By |2019-09-06T12:33:28-04:00September 6th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Where things stand right now is actually a pretty simple matter. How and why everything might change, as well as how and why we got here, those are more complex issues which depending upon your understanding may not lead to a clear picture of conditions. Right now, we are told, there will be just the [...]

Just Who Was The Intended Audience For The Rate Cut?

By |2019-09-04T17:20:30-04:00September 4th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Federal Reserve policymakers appear to have grown more confident in their more optimistic assessment of the domestic situation. Since cutting the benchmark federal funds range by 25 bps on July 31, in speeches and in other ways Chairman Jay Powell and his group have taken on a more “hawkish” tilt. This isn’t all the way [...]

The ISM Conundrum

By |2019-09-03T12:46:23-04:00September 3rd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Bond yields have tumbled this morning, bringing the 10-year US Treasury rate within sight of its record low level. The catalyst appears to have been the ISM’s Manufacturing PMI. Falling below 50, this widely followed economic indicator continues its rapid unwinding. Back in November 2018, at just about 59 the overall index had still been [...]

Gold: Big Difference Which Kind of Hedge It Truly Is

By |2019-08-30T16:16:19-04:00August 30th, 2019|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It isn’t inflation which is driving gold higher, at least not the current levels of inflation. According to the latest update from the Bureau of Economic Analysis, the Federal Reserve’s preferred inflation calculation, the PCE Deflator, continues to significantly undershoot. Monetary policy explicitly calls for that rate to be consistent around 2%, an outcome policymakers [...]

The Corroboration and Costs of Fear Gold

By |2019-08-27T17:02:18-04:00August 27th, 2019|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Gold is the ultimate hedge, but it is far from perfect. Unlike, say, sovereign bonds there should be no expectation for a negatively correlated price. You can buy a UST or German bund even at negative yields and at least expect the price to rise when things are at their worst. Flight to safety or [...]

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 [...]