As much as there has been movement and drama in US credit, the same can be said of European credit. That is, of course, no surprise given the vast linkages between the two, but that does not necessarily diminish the European “flavor” of those home “markets.” Most attention is paid to Germany and its bund market, and for very good [...]
There are “portfolio effects” for individual investors, bank balance sheets and even interbank tendencies, or at least that is according to central bankers. The rather tame ECB announcement this week did highlight and clarify what Mario Draghi and his euro monetarists wish to accomplish. The new measures will support specific market segments that play a key role in the financing [...]
With credit markets in Europe and the US taking a bit of a pause for profit-taking or reassessment, it is notable that currencies have not. The euro finally broke free of what looked like a steady range, though unfortunately to the downside. While that may be celebrated by orthodox economists in Brussels and elsewhere, it should not as such devaluation [...]
There are several misconceptions about the US$ as the world’s reserve currency, including the use of the hegemony qualifier. Part of that stems from a very persistent lack of understanding about what actually took the place of the gold exchange standard after Bretton Woods (which itself is misunderstood as it replaced other forms of exchange control). You hear the term [...]
There is a growing bid for safety in almost every corner of the globe at this moment, save for a few outliers. Even the 10-year JGP sits at 50 bps today despite the spike in consumer inflation engineered by the Bank of Japan’s QQE. Of course, with BoJ buying up almost everything in sight, that may not be a relevant [...]
With the introduction of the world’s first major negative interest rate, I believe it was fully expected that the euro would devalue. After all, it sounds very much like an act of debasement, intentional and heavy, that should move the currency “markets”, but that has not been the case. In fact, the euro appears as much captured by confused stasis [...]
The ECB and Mario Draghi made some fairly dramatic moves in European monetary policy last week. They weren't entirely unexpected but the market response indicates some disappointment that they didn't do the full monty and initiate outright QE. Draghi has spoken recently about his desire to see a lower Euro and the last couple of weeks things have been going [...]
The ECB is widely expected to cut rates again tomorrow, and may include a program to “encourage” securitization of loans to small and medium businesses (SME). For now, the idea is to reduce the “drag” on Europe’s purported recovery, as, once again, the central banking regime turns to debt as the one and only solution. As I noted last week, [...]
The global dollar situation continues to get muddied by divergent and apparently unrelated factors of significant scale. The Chinese are still not buying UST with nearly the same vigor that was very evident prior to the dollar travails last year (which I still believe is dollar liquidity rather than PBOC intent), while Japan and Belgium have suddenly found themselves infatuated [...]
Mario Draghi was out yesterday with comments about the recent strength of the Euro (via the WSJ): WASHINGTON—European Central Bank President Mario Draghi on Saturday ratcheted up his warnings about the strong euro, saying a further rise in the exchange rate would trigger additional monetary easing to keep inflation from falling too low. "A strengthening of the exchange rate requires further monetary [...]
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