We’ve got repo, erratic federal funds market, German 2s correlated with it, plunging bond yields, angry swaps (IR and FX), and economic data increasingly and more speedily in the wrong direction. Overseas official entities piled even more into the foreign repo pool, their payments dollar buffer, another definitive sign of a much more acute dollar shortage worldwide. Is it even [...]
Maybe blame the ECB. On June 5, 2014, Europe’s central bank announced a change in monetary policy. Beginning June 11, their deposit account mechanism that acts as a hard floor for European money rates would be set below zero for the first time. It would mean any funds left on deposit with the ECB in this account would be “paid” [...]
At this point in the longer term process of unwinding the Fed’s prior emergency activities, the yield curve was supposed to flatten. That was the plan all along. If monetary policy was successful, or had even run into just dumb luck somewhere in the last ten years, here where policymakers declare the economy to be short rates would be moving [...]
It is simply the nature of modern Economics to get most things backward. Positive Economics particularly in the form of econometrics has been like a declaration of ignorance, where Economists have formally decided to try and understand as little as possible. If you know anything about statistics you know why, for the one thing that bogs down statistical equations and [...]
Nothing says “fixed” quite like bureaucrats responding to a past crisis they did not foresee (and in the case of European bureaucrats, actively denied while it was happening) by establishing more layers of bureaucracies to “prevent” it from happening again. It is the most predictable result in all of finance and money as the government acting so busily to assure [...]
Starting June 8, oil prices began falling again, reversing their more optimistic trend that had lingered since February 11 long after the usual correlation to CNY was broken. In fact, by the time WTI had peaked, CNY was already being meddled with again in clear PBOC interference. Despite being backward to what was 2015’s relationship of death, by July the [...]
Japanese officials including those at the Bank of Japan have been acting very erratic of late, eschewing the more traditional financial setting of vagueness. First it was NIRP that immediately blew up in their face, leading to very loud rumors of additional bank “stimulus” to offset NIRP only to have the BoJ instead do nothing at its last policy meeting. [...]
A few weeks back, on March 18, the Japanese government bond market was hit with a “buying panic” of some noteworthy proportion. Yields all across the curve dropped, which takes some doing since yields were already at that point mostly negative. Common sense forces any sane person to wonder if sanity itself remains relevant to global finance: That raises the [...]
The yield on the Japanese government’s 10-year paper traded negative yesterday for the 17th straight session. When Haruhiko Kuroda first announced his negative rate experimentation, the 10-year JGB was low but still safely positive, yielding 22.9 bps on January 28. It would be negative for the first time on February 9 right as the rest of the world started to [...]
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