201801.17
0
2

Fortress TIC

Goldman Sachs reported FICC revenues of just $1 billion in Q4 2017. That was the lowest for the Wall Street firm, technically a bank, since it converted from properly a securities business to one during the worst of 2008. That was 50% less in “bond trading” than Goldman had produced during Q4 2016. You start…

201801.16
9
4

Confirming the Big Change In 2017

What determines the price of gold? It seems like it should be an easy question to answer, but gold more than perhaps any other asset often mystifies in its behavior. Part of the reason is mainstream, orthodox Economics and its practitioners who have waged an intentional war on the metal for more than a century…

201801.10
0
5

China Doesn’t Want UST’s? I’ve Heard That Somewhere Before

For quite a long time I obsessed over November 20, 2013. It was a day that for the vast majority of humanity was like any other, nothing too far out of normal and certainly nothing that would seem to mark it for remembrance. But in my realm of yield curves and interest rate swaps, the…

201801.02
Off
7

The Chinese Appear To Be Rushed

While the Western world was off for Christmas and New Year’s, the Chinese appeared to have taken advantage of what was a pretty clear buildup of “dollars” in Hong Kong. Going back to early November, HKD had resumed its downward trend indicative of (strained) funding moving again in that direction (if it was more normal…

201712.27
3
1

Rising ‘Dollar’ Re-Rises? Part 2, The Fruits of Our Obsession

I suppose it’s easy to look at gold and see only fear. It is, after all, the ultimate currency hedge. Therefore, if the price is rising there is probably a good chance fear over monetary considerations is, too. The opposite interpretation, then, would appear to be just as straightforward, but it’s often complicated by the…

201712.19
4
5

Sick of ‘Dollars’, But What Else Is There?

If China wishes to ever throw off the shackles of the eurodollar system, and they do, to eventually go out on its own in an RMB dominated world there is a lot to cleanup long before that’s ever an attainable goal. To start with, we don’t know near enough about what’s going on inside that…

201712.18
2
2

Chinese Really Are Not Tightening, Though They Would Be Thrilled If You Thought That

Why would any central bank try to disguise the fact that it is being highly accommodative in its own money markets? That would be a strange place to start, made all the more so by the further observation the same central bank is perfectly happy if you thought it was doing the opposite. Cryptic introduction…

201712.14
1
3

Chinese Are Not Tightening, Though They Would Be Thrilled If You Thought That

The PBOC has two seemingly competing objectives that in reality are one and the same. Overnight, China’s central bank raised two of its money rates. The rate it charges mostly the biggest banks for access to the Medium-term Lending Facility (MLF) was increased by 5 bps to 3.25%. In addition, its reverse repo interest settings…

201712.07
9
4

Seriously, Wherefore Art Thou Collateral?

I’m going to go out on a limb and claim there is something seriously wrong in repo. All jokes aside, I know it sounds like a broken record but the dimension that matters is not intermittent collateral problems so much as the greater intensity to them and in a condensing timeframe. Escalation is a description…

201712.05
1
5

COT Blue: Bonds Are Not Tuned In To The Mainstream Channel

You do have to wonder to whom the increasingly shrill bond market declarations are being directed. It’s very likely that Bloomberg’s now daily haranguing “the yield curve can’t possibly be right” tirades aren’t meant for UST investors. Rather, it is perfectly evident that the treasury market is going to do what it does regardless, and…