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The Quarks and Quirks of CNY’s Big Drop

By |2018-07-25T13:04:08-04:00July 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In 1962, physicist Wolfgang Panofsky finally obtained funding from the Atomic Energy Commission. As a faculty member at Stanford University he wanted the federal government to fund his monster. Dubbed Project M, for monster, Dr. Panofsky was seeking a method for scientists to obtain evidence for what was really going on inside the atom. The project was really a linear [...]

TIC Confirms Pretty Much Everything

By |2018-07-18T17:39:55-04:00July 18th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Russian ruble has fared far and away much better than its EM peers. Compared to something like the Brazilian real, there is no comparison. The ruble has been relatively steady following an initial drop in April with the imposition of sanctions. April 19 came and went, and while that date is displayed prominently across all the key currencies it [...]

China Reopens With Another Sneeze

By |2018-06-19T19:22:00-04:00June 19th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 celebrations have apparently spread all [...]

This Is A Really Strange Development (UPDATED)

By |2018-05-25T12:40:18-04:00May 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 might have caused it. One [...]

TIC in March

By |2018-05-18T16:19:34-04:00May 18th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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, there was a surge in [...]

This Is A Really Strange Development

By |2018-05-17T17:41:55-04:00May 17th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 in custody on behalf of [...]

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

By |2018-05-07T17:04:12-04:00May 7th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 QE’s spaced out over many [...]

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

By |2018-04-25T19:46:51-04:00April 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 agree, as noted in this [...]

Moving Past The Oily Path of Least Resistance?

By |2018-04-25T15:45:00-04:00April 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 well as over the days [...]

Very Interesting, These ‘Its’

By |2018-04-19T18:45:31-04:00April 19th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 started carefully. They were only [...]

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