China’s central bank, unlike other central banks, is constantly active almost never resting. Because it is always in motion, the PBOC can seem to be “adding” liquidity at the very same time it might be “draining” it. Its specific actions should never be interpreted as standalone procedures related solely to some unknown policy stance. That is particularly true given that [...]
You can kind of get a feel for where we are by days like today. In the morning, a foreign central bank in almost grand standing (for now) is obliged to crash a money market of its own making and the world responds, initially, by cheerful enthusiasm. As O/N HIBOR was making its way up to 66%, oil prices (February [...]
As much as overseas markets, particularly emerging, have come roaring back in a lot of places, there is still palpable unease in dollar allocations. That is as much expected as any kind of erosion or dysfunction will take a meandering course of ebbs and flows. But I am a little surprised at how easy the concerns of last year have [...]
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 [...]
Analyzing anything of and around China is difficult to begin with, so any misconceptions that form are understandable. That being said, there are certain methodologies to global finance that penetrate even these potential bends in conventional wisdom. I think that applies to recent commentary on the Chinese financial system as it relates to currency changes. After appreciating steadily since revaluation [...]
If you haven’t discerned to this point, funding markets are incredibly complex and intricately linked across innumerable network nodes that make precise estimations, even analysis, equally difficult and complex. The primary nodule as it relates to global finance is geographically centered in London, as the eurodollar market largely operates there. With the “US dollar” as the reserve currency (I use [...]
The Reserve Bank of India (RBI) was back in action yesterday, this time promising monetary measures in search of stability not just for the rupee but for collapsing bond and stock markets. “Markets have fallen despite steps taken by the government and the Reserve Bank to support the beaten-down bond market. The RBI relaxed rules on mandatory bond holdings for [...]
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