201410.24
1
0

What Magnificent (For Some) Complications

In July 2014, just as the dollar was beginning to tighten with what seems like an overly sensitive trigger, the US Treasury Dept’s Office of Financial Research published a paper by Zoltan Pozsar that attempted to map out the financial system as it actually exists (hat tip to W Kraus for sending it to me)….

201410.23
1
0

Implications of Funding Market Asymmetry

While this morning’s post was more about longer-term implications of “dollar” changes, there are a couple of observations pertinent to the shorter-term that I think need consideration too. For whatever reason, whether it was, like September 4, 2013, an anticipation of countertrend “dovishness” on the part of the FOMC, the eurodollar market gained a sudden…

201410.23
3
0

More Dollar Clarity

There would be a lot more use for the Treasury Dept’s TIC flows and holdings data if it was released closer to real time, but even with that evident staleness about it I think there is a lot of use in how it frames what we see in the dollar and currencies (thus spilling over…

201410.17
1
0

Liquidity Discrepancies Are Not A Particularly Welcome Signal

My colleague Joe Calhoun noted that the Wall Street Journal has documented further anecdotes about the credit market illiquidity this week. Corporate-bond investors have struggled this week to find trading partners for some large orders, causing unusual price drops and raising concerns that trading could freeze in future market turmoil. “Buyers just disappeared” early Thursday…

201410.17 0

Tangled Web Of The Asian Dollar And The Implications Of Altered Central Bank Thinking

The PBOC continues along with its path of “targeting” liquidity rather than “flooding” as has been done in the past. Expectations for Chinese action, however, seem to be resistant to getting that message. This is not something that is just now being applied, as if a sudden and unanticipated change in thinking. The entire default…

201410.14
1
0

Oily Artifice

It is worth furthering the point raised by San Francisco Fed President John Williams. Just as when QE2 ended it wasn’t the end of QE in America, the belated end of QE3 and QE4 also may be just a temporary interruption. Mr. Williams gave essentially two criteria, though I added a few more from my…

201410.12
3
0

Down A Slippery Slope

This will be a shorter than normal commentary as I’m on my annual pilgrimage to Hilton Head Island to see old friends, talk about markets, politics and other subjects not suitable for a family friendly publication and to torture ourselves on the golf courses. As an aside, you are an evil man Pete Dye. I…

201410.05
1
0

What’s Up With The Dollar?

The US Dollar index is up 8.6% since the beginning of July and it seems everyone is jumping on the King Dollar bandwagon. With Mario Draghi openly rooting for a weaker Euro and Abenomics pushing down the Yen the dollar has emerged, as it often does, as the safe haven for global investors. The rise…

201410.02
3
0

Kurtosis and The Three (Great) Bears

It is amazing how much “we” forget in the entire short space of “cycles.” That may be a function of an overload of information coming in from all sides, but I doubt it. I have always thought that more was better in that regard. Instead, I prefer to think of it as another monetary corruption….

201410.01
5
0

Reverse Repo As A Fairy Tale

“We don’t exactly know how it will work” should be stamped upon every message coming from the policymaking apparatus from this point forward, and then retroactively applied to every message in the age of risk and rate repression. Action in short-term money markets has heated up yet again, and that is not a positive statement…