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interest rates

Chinese Treasuries and FOMC Policies, The Big Number That Just Turned Against Jay Powell

By |2019-05-08T16:46:40-04:00May 8th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In a period when weird and unusual are commonplace, it was one of the more noteworthy and interesting outliers. Late in August 2010, a media report attributed to Hong Kong’s Ming Pao news agency suggested Zhou Xiaochuan was on the run. Supposedly, the Governor for the People’s Bank of China, the country’s central bank, was defecting to the United States [...]

The Forced Exile Of Bond Vigilantes

By |2019-04-08T15:40:25-04:00April 8th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Japan is the very model of fiscal irresponsibility. If ever there was a bond vigilante, surely they would have a Japanese address. At the end of what was the Bank of Japan’s 133rd fiscal year, on March 31, 2018, Japan’s central bank reported total assets of ¥528,285,679,854,140. Of which, ¥448,326,107,324,120 was Japanese government bonds (JGB). Officials became increasingly confident these [...]

The Joke Finally Broke

By |2019-03-21T16:21:15-04:00March 21st, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It took a little longer than I expected, but it finally happened. FRBNY reports this morning that as of yesterday afternoon the effective federal funds rate was 2.41%. You’ll note that IOER, the ceiling, is still set 10 bps under the target upper boundary of 2.50%. Some quick math, that means EFF was yesterday 1 bps above IOER. The joke [...]

What Is Missed Inflation

By |2019-03-12T12:34:44-04:00March 12th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

As an alternate member of the FOMC, Lorretta Mester has been sounding off on inflation. When the payroll report for the month of August 2018 was released early in September, Mester as President of the Cleveland Fed was widely quoted for her “hawkish” stance. Referencing the highest wage growth in a decade, speaking in Boston she said, “Today’s [jobs] report [...]

Jay Powell Is In The Way (Literally, for the UST Curve)

By |2019-02-27T12:54:39-05:00February 27th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Early in May 2013, the word “taper” exploded into the mainstream. It was everywhere, scarcely an article written or news story pieced together which hadn't included the term (even though Ben Bernanke never actually said it). The so-called tantrum spread like wildfire simply because of what it represented, the very thing everyone had been waiting for. Confirmation at last the [...]

Global Asset Allocation Update: The More Things Change…

By |2019-02-22T10:08:02-05:00February 22nd, 2019|Alhambra Portfolios|

I haven't written a formal asset allocation update since November so this one will be a little bit of catch-up for non-clients as we did make some minor changes in early January. On January 7th we shifted our bond allocation somewhat to reduce duration. Continuing to hold longer-dated bonds at that point essentially meant betting on a recession and I [...]

Sinking Shippers Signal Global Goods Troubles

By |2019-02-21T17:50:19-05:00February 21st, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It infects every boardroom across the world. Big business requires decent forecasting, yet time and again it seems they are deprived of what they desperately need. Instead, even after this last decade, the world’s largest companies continue to be surprised by weakness that is far more prevalent than strength. It has been the one constant. Central bankers declare their policies [...]

COT Blue: The Velocity of Capitulation

By |2019-02-11T16:13:32-05:00February 11th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On Friday, the CFTC posted its COT data for the first week in 2019. For crude oil, capitulation. For US Treasury bond futures, capitulation. In the latter financial market, unsurprisingly the net market position utterly collapsed during December. From a relatively high (meaning market overall short) +58k contracts that last week in November when everyone piled into liquidity hedges, the [...]

Bond Curves Right All Along, But It Won’t Matter (Yet)

By |2019-01-30T16:53:14-05:00January 30th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Men have long dreamed of optimal outcomes. There has to be a better way, a person will say every generation. Freedom is far too messy and unpredictable. Everybody hates the fat tails, unless and until they realize it is outlier outcomes that actually mark progress. The idea was born in the eighties that Economics had become sufficiently advanced that the [...]

Monthly Macro Monitor – January 2019

By |2019-10-23T15:08:30-04:00January 24th, 2019|Alhambra Research, Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy|

A Return To Normalcy In the first two years after a newly elected President takes office he enacts a major tax cut that primarily benefits the wealthy and significantly raises tariffs on imports. His foreign policy is erratic but generally pulls the country back from foreign commitments. He also works to reduce immigration and roll back regulations enacted by his [...]

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