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funding

Fed Financial Stability Report – October 2023 – Summary

By |2023-10-23T14:39:57-04:00October 23rd, 2023|Economy|

This Fed report is meant to be a broad assessment of financial system stability. It's purpose is transparency in an attempt to identify vulnerabilities in the system not to try to identify areas for possible shocks. It looks at 4 broad categories and how they interact. Asset Price Valuation Household and Business Borrowing (Level) Financial Sector Leverage (Level) Funding (Current [...]

Complete Catalog of Chaos and Carnage

By |2022-06-16T19:41:28-04:00June 16th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Wow, what an incredible day across the entire marketplace. And by incredible I mean nothing good at all. Predictable, though. All the warning signs and warned-about fragilities playing out as expected, escalation up and down each curve or equity index. To start with, I still don’t really know where the bills are right now! That it is even a question [...]

Repo, Sponsored Repo, And Bank Reserves

By |2020-02-04T19:27:35-05:00February 4th, 2020|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Gordon E. Moore had co-founded Intel and so he had unique insight into the growing computer world. The revolution required a lot more (pardon the pun) computing power, which, Moore surmised, wouldn’t be too difficult to deliver. In 1965, he had observed that innovations were leading firms like his to be able to install double the number of transistors on [...]

Phugoid Dollar Funding

By |2019-04-03T16:49:11-04:00April 3rd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On August 12, 1985, Japan Airways flight 123 left Tokyo’s Haneda Airport on its way to a scheduled arrival in Osaka. Twelve minutes into the flight, the aircraft, a Boeing 747, suffered catastrophic failure when an aft pressure bulkhead burst. The airplane had been improperly repaired from a tailstrike (the tail of the aircraft actually hitting the runway pavement) seven [...]

2018: The Collateral Case

By |2018-11-20T16:48:49-05:00November 20th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Last December, something clearly broke. The global basis had swept far under zero again, an ominous sign that eurodollar banks were having trouble creating, finding, and redistributing global funding. A cross currency basis swap is one way to do it, the negative basis indicating a desperate shortage of dollars offshore (eurodollars). The negative basis wasn’t the only thing suggesting dramatic [...]

Two Years Too Late The Yield Curve Becomes Interesting

By |2016-05-16T18:45:58-04:00May 16th, 2016|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

The US Treasury yield curve is flattening again, with parts finally in 2016 surpassing the bearishness exhibited to start 2015. The mainstream is just now starting to notice likely because unlike last year there are no longer credible excuses to simply wish it away. “Transitory” is not a word you find much anymore, replaced instead by reluctant and forced acknowledgement [...]

Focused On The Wrong End of Oil

By |2016-04-27T18:47:53-04:00April 27th, 2016|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The front end of the oil price complex continues to get all the attention because it seems to further the more optimistic narrative. It is the back end, however, that is most significant. The nearer maturities of the futures curve reflect more the funding environment than the fundamental view of oil and the economy. The lack of continued liquidation has [...]

Back to Sleep

By |2014-10-20T16:00:44-04:00October 20th, 2014|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The reason I have been characterizing the ECB’s actions since this summer as “desperate” is entirely due to the fact they are simply redoing things and expecting everyone to simply assume they are acting anew. That may not be entirely the case with their obsession with Eonia (more on that below), but narrowing the corridor has been the active policy [...]

Massive Dollar Warning

By |2013-08-15T10:26:47-04:00August 15th, 2013|Markets|

The US$ shortage has been a theme around here for most of 2013. To this point, it has been largely hidden in the shadows and vagaries of modern global finance, only hinted at through secondary and tertiary indications. Even then, like the gold selloff, the dollar shortage was ambiguous and cunning. From repo warnings and the dire state of collateral [...]

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