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liquidity risk

The Great Eurodollar Famine: The Pendulum of Money Creation Combined With Intermediation

By |2021-10-11T19:37:50-04:00October 11th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It was one of those signals which mattered more than the seemingly trivial details surrounding the affair. The name MF Global doesn’t mean very much these days, but for a time in late 2011 it came to represent outright fear. Some were even declaring it the next “Lehman.” While the “bank” did eventually fail, and the implications of it came [...]

Until This Changes, Forget Inflation: Banks Bought Epic Amounts of Safe, Liquid Assets in H1 ’21

By |2021-10-08T20:39:23-04:00October 8th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The first half of 2021 was inundated with government helicopters, more QE’s, and then CPI’s put up with guarantees the “inflation” was going to continue for a long time. Jamie Dimon, JP Morgan’s often hapless CEO, proudly declared US Treasuries beyond the touch of any 10-foot pole. With the economy on fire, he “reasoned”, who would ever want safe and [...]

(Open) Interesting: Where’d All The Love Go?

By |2020-06-23T19:37:37-04:00June 23rd, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For awhile there, a few weeks anyway, the 30-year US Treasury long bond had become the star of the mainstream show. Showered with its 15 minutes of fame, everyone loved how, for once, it seemed to agree with Jay Powell and the preferred narrative about the effectiveness of his technocracy. The idiocy of this attention was exposed by just how [...]

The 10s Back To A 1-handle Again; New Information That Isn’t New

By |2019-07-02T18:50:05-04:00July 2nd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The benchmark 10-year US Treasury yield closed below 2% for the first time since Donald Trump was elected President. Having flirted with that level several times over the past week, today the most-watched interest rate on the planet finally breached this one startling round number. And it comes during a week which by every conventional account should have been hugely [...]

Baoshang Isn’t China’s Lehman, So Why Does April 17 Show Up All Over Global Markets?

By |2019-06-24T16:27:12-04:00June 24th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

One month ago, on May 24, Chinese regulators stunned the world by announcing the first bank restructuring in modern China’s history. Based in Inner Mongolia, Baoshang Bank was seized because of what the PBOC and China Banking and Insurance Regulatory Commission said was “severe credit risk.” Initial reports attempted to link Baoshang’s struggles to financier Xiao Jianhua who disappeared in [...]

What Bear Stearns Taught Us About The Folly of the BOND ROUT; Bonus: EFF’s Recent And Ongoing Contribution To The Same

By |2019-04-02T19:02:07-04:00April 2nd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Over the last several years, we’ve been bombarded with mainstream stories about how interest rates have nowhere to go but up. Inflation, recovery, and most of all fundamentals. Who in their right mind is going to buy all this government debt! The supply is rising and, according to these people, the demand can only be falling. There is nothing in [...]

A River In Egypt

By |2019-03-26T13:01:02-04:00March 26th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

No, no, no. Everything is awesome. The denials have spread faster than the market prices have changed. Globally synchronized growth did a number on a number of people. I really think it a function of time. It has been so long since we’ve seen economic growth, real economic growth, that so many just believe it has to happen because it [...]

The Politics of Spreading Inversion(s)

By |2019-01-03T18:14:44-05:00January 3rd, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Clothed in immense self-denial, hung up on absurd self-confidence, Federal Reserve officials gathered on August 7, 2007, to discuss how things really weren’t as bad as everyone seemed to think. There were several key conversations taking place at the FOMC meeting held then all leading nowhere. Policymakers would literally laugh off obvious distress in crucial markets. Here’s one example: MR. [...]

Cue The Bad

By |2018-12-03T19:39:17-05:00December 3rd, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When the FOMC published the minutes for its November policy meeting, they included an unusually lengthy discussion about federal funds (effective) and IOER. I have no doubt that policymakers would rather have skipped the topic altogether. Demonstrating how little they actually control matters, the plight of EFF has forced them into an almost detailed digression. One thing they wrote with [...]

Not A Good Start For China’s Third R

By |2018-10-17T16:39:56-04:00October 17th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

File it under “what were they thinking?” In March 2015, confronted by a severe external monetary squeeze, the PBOC made a truly radical choice. Maybe it was that for a few months anyway things looked a little better. The eurodollar system had practically melted down globally first on October 15, 2014 (collateral) and then in December 2014 and January 2015 [...]

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