What a difference a year makes. As 2017 finished up, the Federal Reserve was widely seen as turning “hawkish.” Inflation in the US, many believed, was about to be unleashed by a blistering labor market so tight we’ve not seen anything like it in decades. The central bank would be forced into a quickened pace of “rate hikes” attempting to [...]
If the road to Hell is paved with good intentions, in economic terms the paving is done by zombies. We’ve all heard of the convention regarding Japanification. In desperation trying to avoid a worse fate, many of Japan’s tortured financial institutions were left open and operating so as to not force losses too much at a time. Rather than allow [...]
Something had to give one way or the other. With all the oil traders piled onto the long side, either demand had to seriously pick up (or plausibly appear ready to do so) or the weak hands would start to capitulate. But as WTI has pulled back from $54 to around so far $48, the futures market remains nearly as [...]
Mainstream commentary will continue to harp on the unemployment rate as if it were some kind of lucky charm for protection against an increasingly unrecognizable and frightening (to the orthodoxy) world around it. That appeal dominates even where it has so little if any bearing, as in negative swap spreads that were in truth an easy and simple warning about [...]
You almost have to marvel at the resilience shown in leveraged loan pricing over the past nearly month. Prior to the Fed’s rate decision on December 16, the leveraged loan market, as with the rest of the junk bubble, was sinking fast and furiously. Since then, however, despite great financial turmoil all over the world, and even in the places [...]
In its December 2015 policy statement, the one that raised the federal funds target corridor, the FOMC changed the language surrounding its inflation stance. They still projected the 2%, of course, but were now indicating that they were more certain than ever about it. In many ways they had to shift the wording because of the actions; the prior passage [...]
There isn’t much commentary needed here, as the prices and yields indicate everything relevant and important. I would only add that seeing August 24, October 15 and now the change (in acceleration) in December all add up to something different than the FOMC’s whatever influence. There is no monetary policy reason for the August 24 global liquidations to show up [...]
Crude oil prices are exhibiting all the signs of an increasingly difficult funding environment. The front end of the futures curve is being bent dramatically in relation to even close maturities just outside the next few months. Such contango is the obvious imprint of finance, though that is not to say that economic expectations are neutral in the curve. Far [...]
If China is struggling with the various facets of the interconnected nature of eurodollar function, then we don’t have to go far to see that in almost perfect clarity. By many accounts, funding and liquidity remain highly disturbed and becoming more uniformly so. From gold to francs to copper to junk debt, pricing reflects more so a combined economic and [...]
To say that the “dollar” is a mess to begin the week is to state the obvious. The condition left at Friday’s close has persisted, with commodities and such being sold heavily from the outset. Japan’s renewed “recession” (I use quotes only in the conventional sense, given that the Japanese economy never truly left) hasn’t helped in that regard, but [...]
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