The theme since August 24 in wholesale funding, eurodollar and Asian “dollar”, has been that even the global and intense liquidation was not enough to square the mighty imbalance that has been building. It’s a frightening prospect, but in money markets everywhere that is the only interpretation left. The media, unable to make heads or tails, finds small nuggets of [...]
With close experience to the “dollar” run in July and August, we should expect that at least the contours of that disorder would be visible in the TIC data for July. The figures provided by the Treasury Dept. did not disappoint. In fact, the “dollar” waves themselves become almost fully visible in the data here and have really illuminated the [...]
I think the dominant feature of August was rising interbank “dollar” rates; everything that followed out in the open was traced to “whatever” was taking place in funding markets. Repo rates shot upward, as did unsecured LIBOR (leading to serious credit risk implications via TED). All that led into the yuan crisis escalating beyond the PBOC’s rather limited control (which [...]
When grounded in the framework of traditional banking, wholesale dynamics can be quite confusing to the point of being impenetrable. Nowhere is that more the case than the wholesale ideas of currency and what counts for establishing chains of traded liabilities. In the traditional banking/monetary framework, everything is reducible to money; all else are just derivative claims on it. The [...]
As doubts surrounding QE have grown, there has been a somewhat detectable if still small trend in central banker repentance. Alan Greenspan to an extent has embraced a more decentralized and market framework in his public comments even though he has yet, to my knowledge, actually repudiate his own work more directly. As noted a few days ago, former BoE [...]
I think it is worth re-examining at this point, with a lull in the “dollar” at the moment, the effects of dark leverage upon actual bank mechanics and thus actual “dollar” supply. The idea of liquidity in the wholesale system is multi-dimensional and often confusing as it relates to what is typically believed. For example, the week the world woke [...]
While everyone remains sure that the PBOC is actively trying to “allow” the yuan to depreciate as some kind of export catalyst, the “dollar” continues to show (not suggest) otherwise. Liquidity and “dollar” markets are still roiled rather than soothed, especially the US treasury market where the bid right at the open (what look very much like continued collateral calls) [...]
The San Francisco Fed just published a study in its Economic Letter that purports both that the housing bubble was exogenous and that the Fed would have had to crash the economy to a much greater extent than even the Great Recession to gain control of it somewhat pre-emptively. As you can easily surmise, there are a whole host of [...]
It will be a few more days before the major banks release their quarterly balance sheet figures for Q2. We already know from their earnings reports that money dealing is no longer much of a high priority for global banks, as it is, quite simply, no longer profitable. Commentary still dwells on that as a matter of Dodd-Frank, Basel III [...]
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