There was some notable grumbling in the months leading up to it, but with the yield curve inverting in August 2019 at the 2s10s junctures, the only part the public has been led to believe is worth noticing, it unleashed a tidal wave of denials. They were weird and obviously desperate, too, because Jay Powell’s Fed had already conducted its [...]
With such low levels of self-awareness, it isn’t surprising that the FOMC’s members continue to pour gasoline on the already-blazing curve fire. March Madness is supposed to be on the courts of college basketball, instead it is playing out more vividly across all financial markets. One reason why is that policymakers at the Fed really still believe, even after so [...]
When even Bloomberg can’t help but notice, not just notice but then write about it, that’s significant. Normally a staunch water carrier for the official Federal Reserve position, these curves getting bent so far out of what would be better shapes aren’t so easy to just dismiss and ignore any longer. Jay Powell says household and business finances are holding [...]
The Federal Reserve did something today, or actually announced today that it will do something as of tomorrow. And since we’re all conditioned to believe this is the biggest thing ever, I’ll have to add my own $0.02 (in eurodollars, of course, can’t be bank reserves) frustratingly contributing to the very ritual I’m committed to seeing end.We shouldn’t care much [...]
The 1947-48 experience was truly painful, maybe even terrifying. The US and Europe had just come out of a decade when the worst deflationary consequences were so widespread that the period immediately following quickly erupted into the worst conflagration in human history. Then, suddenly, consumer prices skyrocketed and it left many Americans wondering if there would ever be an end [...]
This is a truly weird shape for the US Treasury curve to find for itself. Really steep up front, seriously upward sloping consistent with the Fed’s stated rate hike intentions (which influence short-term rates most directly up to around the 2-year note). From there on down, though, it’s flat. As in pancake, almost. I can’t recall a time when the [...]
Though I say, write, and communicate all the time how the Federal Reserve is not a central bank because it doesn’t do money and that therefore its non-money monetary policies are little more than pop psychology conveyed via an increasingly stale puppet show, you might be surprised to learn that none other than Janet Yellen has publicly agreed with my [...]
The labor theory of inflation, the one the FOMC will use to justify rate hikes in 2022 (as far as they might go), isn’t just wages and competition for the presumed scarce marginal worker. While a tight labor market might drive up the marginal cost for labor inputs, in order for companies to then pass those higher costs back to [...]
At issue is what she or they mean when the use the qualifier “worse.” It may be that how policymakers are thinking about it ends up being very different from reality or bond market discounting. No surprise, these two camps have frequently been at odds and for a very long time; Alan Greenspan’s “conundrum” a full seventeen years ago this [...]
Now it’s the Russian’s fault. Belligerence surrounding Donbas and Ukraine, raw materials and energy supplies to Europe threatened by Putin’s coiled bear. Why wouldn’t markets grow worried?There’s always a reason why we shouldn’t take these things seriously, or quickly dismiss them out of hand as the temporary product of whichever political fear-of-the-day. This isn’t to write that these things aren’t [...]
Stay In Touch