By all meaningful measures, credit markets today aren’t any different than they were after the first “dollar” wave crested and subsided. Despite all that has transpired all over the place in 2015, this resiliency is worrisome. No matter how much commentary wishes it to be a comforting tool of monetary policy adjusting into economic salvation, the fact that these indications [...]
The problem with Brazil is that its central bank has done everything the monetary textbook requires of it. Setting aside that Banco itself is a literal mishmash of public and private interests (what central bank isn’t?), the freefall in the Brazilian economy of late is simply puzzling to the mainstream. Unlike the US or Europe, at least the descent is [...]
The overnight rate in offshore renminbi liquidity surged over 4% today, the fifth such notable heave in this half of 2015. The rate had been under 2% for the six trading days before and including Friday, but overnight CNH HIBOR jumped from 1.7325% to 4.4525% over the weekend. The one-week maturity similarly spiked, moving from 2.796% at the end of [...]
To say that the “dollar” is a mess to begin the week is to state the obvious. The condition left at Friday’s close has persisted, with commodities and such being sold heavily from the outset. Japan’s renewed “recession” (I use quotes only in the conventional sense, given that the Japanese economy never truly left) hasn’t helped in that regard, but [...]
The duality of gold in the modern wholesale fabric has perhaps been on display this year more so than at any time since 2008. That year, the year of the eurodollar-drawn panic, gold was seemingly more volatile than any other asset – if only for its virtuous tendency to as sharply rebound for every major crash. And in 2008 there [...]
You couldn’t really call it a calming effect, as rates never truly settled down rather simply becoming less obviously meddlesome. At the September FOMC, the “dovish” sentiment that was apparently received brought LIBOR rates off their devastatingly devilish perch that had been building from all the way back in early July. As if it needed to be restated, that surge [...]
With the state of the “dollar” being what it is, including the devastating darkening afforded by negative swap spreads everywhere, it isn’t exactly surprising to find that primary dealers continue to hoard UST collateral. By September, dealers were reporting a net positive balance of all coupon holdings of nearly $60 billion. With everyone in the world predicting higher interest rates, [...]
The unrelenting economic decline in China is finally getting the attention of economists and the media as something more than a big problem “for them.” Imports declined by 18.8% in October after having contracted by 20.5% in August. On the export side, Chinese goods sent abroad fell 6.9% year-over-year in dollars which confirms that the contraction is not China’s alone [...]
Last week's employment report raised the odds of a December rate hike considerably and the consensus at this point seems to be that it is a done deal. The employment report was pretty good with the unemployment rate down to 5%, 271,000 jobs added and a pay hike to boot. Year over year average hourly earnings are now up 2.4%, [...]
For one, eurodollar futures are “obliged” to take account of any threats from the FOMC even though, in the end, they might only be self-fulfilling. Because the Fed has very little actual ability to condition money markets, none of that is truly “real” but there remains the unknown and money dealing agents still seem reticent about any kind of (further) [...]
Stay In Touch