If there seems to be more safe haven demand of late, the increasing odds of British exit from the EU is being blamed. According to Yahoo!Finance, Goldman Sachs sees “kinks” in the option structure, an agglomeration of hedging demand that points to maturities around the UK referendum. The absence of any heavy hedging this week suggests that markets have no [...]
In addition to global “dollar” markets, the treasury curve and “inflation” trading both suggest more so disruptive potential than the optimistic path forward laid out by the FOMC’s policy decision. Upward monetary policy adjustments are in anticipation of “overheating” or an economy in the predicate position for its imminent take off. Since credit markets are discounting mechanisms in a manner [...]
Where money markets seem to be regularly unsettled, credit markets are quite the opposite. Those two polar interpretations may, in fact, be quite related as credit markets are not really supposed to be so placid. Yet, here we find them again lacking much determination in any one direction. Inflation breakevens which were steadily rising from January 15 to May 6 [...]
In April 2008, Nassim Taleb was becoming a household name criticizing the quant dominance in finance. Bear Stearns had just failed and the entire edifice of mathematical order was still breaking down, as the last bastions of credit default swap “supply”, the monoline insurers, were still rumored to be heading for insolvency (while the nightly news focused on whether that [...]
The June FOMC statement has done nothing to clear up any suspicions in either direction for credit markets. I think that is actually consistent, in an irrational way, as the FOMC tries to labor under the delusion of recovery, which these “markets” are bound to at least consider, while all good sense says there is none. The result is markets [...]
In the space of a little more than 2 trading days, the US 10-year treasury went from just a tic or two above 2.10% in yield to a few tics above 2.30% in yield. The front end of that comparison was itself remarkable, as the open for trading Friday (payroll lunacy entailing) was down almost 9 bps in yield from [...]
As the “dollar” has taken back some of its pressure we are seeing at least some of the effects of that in various credit and funding markets. There can be no doubt now that the March 18, 2015, FOMC decision to at least position more “dovish” removed a great deal of “dollar” stress from the global network. To that end, [...]
The emphasis of QE in terms of “portfolio effects” and interest rate “stimulus” is to visit upon the entire curve what monetary policy has done in the past in only the shorter maturities. So the evolution of monetarism under activism and interest rate targeting is to bring the entire curve down whereas before it was content to intrude only in [...]
Credit and funding markets have been pretty much defined by “dollar” behavior for most of March in the same manner that defined December and early October. At the outset, it looked as if credit markets had turned the “other” way with interest rates rising and some of the downstream “markets” no longer under such steady pressure. The culmination of that [...]
In the days before 2007, the idea of monetary “stimulus” was relatively straight-forward in theory as well as (seemingly) practice. A central bank declared that it would reduce an interest rate target and the “market” would respond by doing the work for it. In other words, all that was needed was an indication and banks would make it so as [...]
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