201409.19
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And Europe’s Credit Version

While dollar credit and funding undergo their own version of policy-induced confusion, I can’t help but see something similar on Europe’s side of it – though for much different constructions. This week marked the inauguration of the highly publicized T-LTRO’s (again, the flood approach is past) that immediately deflated upon launch. Some expectations were as…

201409.19
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Credit Rundown of Opposing Propositions That Aren’t Necissarily Opposed

There is an interesting dichotomy taking shape in credit markets, including those around the globe (that will be a separate post). Some of this, I think, relates to what FOMC member Richard Fisher related today about concerns over asset bubbles. I think the Economic Times of India summed him up the best: Already there are…

201409.18
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‘Markets’ Want More Yen Debasement?

The good news in Japan for August trade figures is that imports fell 1.5% Y/Y, but that was balanced by an almost identical 1.3% Y/Y decline in exports. Confounding all orthodox expectations, the yen’s radical devaluation did nothing to press divergence between imports and exports as it was “supposed” to. Instead, imports matched exports, at…

201409.18
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Home Construction Still Moving Down

Another month, another instance where supposed “tight” supply and high home prices fail to register any significant change in home construction. Construction figures for August bear little resemblance to the idea that anything other than monetary interference is responsible for the mini-bubble in activity. Further, August represents another month’s worth of confirmation, despite any and…

201409.17
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Dollar Shift Is Actually More Dramatic Than Appears

For the conspicuous lack of drama surrounding currencies in 2014 vs. 2013, there does not seem to be much by way of actual change. Perhaps the only real difference this year (through July) compared to last is how central banks are responding to what they perceive of dollar availability. It is entirely a different perspective…

201409.17
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There’s A Lot To Eonia and the ECB

The ECB turned to negative rates, at least as far their floor, back in June which was supposed to “force” banks to find a suitable alternative to liquid and safe. In orthodox terms this is called the “portfolio effect” as making low-risk contain an outward-facing cost should, as the theory goes, make financial participants shift…

201409.17
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QE’s Taper Reveals Liquidity Degradation

Since we are now in the middle of the final month of a quarter, checking repo stats shows what we have come to expect of a fragile liquidity system. Once again, repo fails spiked sharply in the latest weekly statistics from FRBNY as primary dealers and the Fed’s own repo “fix” fail to affect the…

201409.14
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Good Times, Bad Times

The economic data has taken on a more positive tone recently, at least in some areas, and with an FOMC meeting and Janet Yellen press conference on the schedule this week, the bulls pulled in their horns last week. It seems that, for now anyway, good news is bad news for markets as any indication…

201409.12
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Flat Is Out Again, Though Sentiment May Not Be

For all the drama and activity of bearishness in August, curve steepening has been the primary influence in September. There haven’t been as many notable events that would easily and cleanly explain the sudden shift, other than peculiarities in the cash markets (including supply flow). In other words, I don’t think it much of a…