China Reopens With Another Sneeze

If it seemed a bit calmer yesterday in global markets than has become typical, it was likely due to the absence of Chinese influence. China’s markets were closed for the country’s annual Dragon Boat festival, a holiday tradition that supposedly dates back 2,000 years. According to state media, it’s not strictly Chinese any longer. The…

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Such Fragility, Not Italy

It’s not quite yet on the level of October 15, 2014, but it’s not really that far off, either. What made the prior episode three and a half years ago unique was the condensed timeframe, as well as how far UST yields fell. Today has been a far steadier “flight to safety”, meaning the same…

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ECB’s Turn For A Disappointing Account

Earlier this week the FOMC published the minutes of its April policy meeting, disappointing “dovish” in them which more properly suggests skepticism about the state of economic affairs. Yesterday, it was the ECB’s turn. Releasing the “Account” of also its April gathering, Europe’s central bank began it by noting Germany’s federal securities. Specifically, it mentions…


This Is A Really Strange Development (UPDATED)

Last week, I reported on a sharp drop in repo fails for the week of May 9. The decline was so much that FRBNY indicated there were essentially no fails during those five trading sessions. It was way out of line with recent history and opened up little more than wild speculation as to what…


TIC in March

When we last left off with the TIC data, the figures showed pretty clearly Japan’s retreat from “dollar” dealing during January and February. Global liquidations occurred during January and February. Therefore, it was reasonable to speculate upon Japanese origins of those liquidations. That wasn’t the only interesting development revealed by TIC. Over in Hong Kong,…

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This Is A Really Strange Development

Observing the eurodollar system as I’ve done for so many years, you have to be prepared for curve balls thrown at you. Just when you think you’ve got it clocked (sometimes literally), something changes and it all gets tossed out the window. About a month ago, the Federal Reserve reported a sharp drop of UST’s…

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If There Was No QE, How Could There Be QT?

How big should the Fed’s balance sheet be? It’s a topic that has taken over a lot of academic discussions. Recall that before 2008 the level of bank reserves was practically nil. They didn’t play much of a role in any money market, required reserves or not (this should be a big clue). After four…


It’s The Track Record That Is Unaccounted-for Risk

No one seems able to account for the rise in LIBOR-OIS. I think it’s a vain effort, and focuses on the wrong segments, but nonetheless there is considerable uncertainty which always casts suspicions into the shadows. That is important.  A few weeks ago, all the big bank analysts were alight with their theories. They couldn’t…


Moving Past The Oily Path of Least Resistance?

On April 6, the Trump administration announced a new round of sanctions imposed upon certain Russian officials, persons, and businesses. Treasury Secretary Steve Mnuchin announced their purported purpose in a letter: “The Russian government operates for the disproportionate benefit of oligarchs and government elites.” Russia’s currency, the ruble (RUB), fell sharply after the announcement as…


Very Interesting, These ‘Its’

Today for the first time in over a week, HKD moved. That’s not unsurprising, as we should expect that nothing goes in a straight line – even devaluation of this kind. The issue is more about why it might have moved, or what it cost to move it. The Hong Kong Monetary Authority (HKMA) had…