Flash PMI’s for September 2020 around the world add more evidence to the possibility of a global slowdown during the economy’s all-important rebound quarter. Q2 was the big downturn, and so it always going to be Q3 where the bounce back would be sharpest. While that has definitely been the case, concerns are mounting for what might follow in Q4. [...]
Is the dollar rising, or falling? Does it matter? In one sense, obviously it does. The way in which the dollar behaves dictates how everything else goes. The potential mix-up and confusion start when we have to define exactly what we mean by “dollar.” Or rising. The rising dollar doesn’t always rise. If we are talking about the US currency’s [...]
Eurobonds are not a perfect substitute, but they may be someone’s only alternative. In some ways, Reflation #3’s weakness can be found originating in this context. The “rising dollar”, or eurodollar squeeze, of 2014-16 was a failure and even run on credit-based dollar funding offshore. If banks won’t deliver dollars, what’s left? Bonds. There has been an offshore Eurobond market [...]
One year ago today, something broke. It wasn't a big thing, practically a footnote seemingly not worth mainstream attention. Out of nowhere, the 4-week T-bill yield spiked. On Friday, September 1, 2017, the equivalent interest rate for the instrument was steady at 96 bps. That was already a problem because the Federal Reserve’s RRP was at the time set for [...]
There is just something about August. It is irresistible, apparently, in all the wrong ways. For starters, there are big ones and small ones but somehow they all line up against liquidity and plentiful eurodollar money. In the former class there was, of course, August 9, 2007, August 9, 2011, and August 10, 2015. Even in the latter category there [...]
Argentina has had a good month of July. When last we checked toward the end of June, the peso was still plummeting. It would nearly close below 29, an absolutely astounding drop that made plain this wasn’t devaluation as “stimulus.” That plus the whole record IMF bailout and the immediate dollar funding that came with it. That was June 7, [...]
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 [...]
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 [...]
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