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liquidity

How QE’s End Has So Many Confused

By |2014-12-15T16:48:50-05:00December 10th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

Now that QE is history (for the fourth time) there are a number of misconceptions about what is taking place at the Fed. All the action is located at FRBNY, which only makes the tangled spread of accounting classifications that much worse. Interbank activity has never been much of a widespread, household concept, so the relevance to current circumstances only [...]

The Prior Act of Demolition

By |2014-12-05T11:41:16-05:00December 5th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

Before the financial disconformities of 2013 can be allowed to rest in the annals of financial history, I think there is still one more piece that needs to be analyzed in the context of where we are now. Convention about liquidity disruptions is again leading back to Dodd-Frank and Basel, rightly so, but that isn’t enough to fully capture the [...]

About That ECB QE

By |2014-12-03T15:54:55-05:00December 3rd, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

As the Eurozone absorbs yet another economic blow, the urge to engage in even more historic debasement via the ECB has heightened, to say the least. The talk about a European “QE” is near endless, as that is about all that is left for them to do. That is itself a powerful statement, lost upon those that are calling for [...]

Corporate Evidence For Liquidity Regime Change

By |2014-11-21T17:50:57-05:00November 21st, 2014|Bonds, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Adding to the repo observations from this morning regarding illiquidity and more importantly gathering risk aversion, the behavior of corporate bonds and spreads matches that overall sketch very closely. The key point is how different the corporate bond space, like the UST curve, has behaved in 2014 in relation to 2013. In past periods just prior to recessions, you see [...]

Dragging Tycho Brahe To The Repo Market

By |2014-11-10T17:14:57-05:00November 10th, 2014|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

I probably should start by issuing the caveat that it is dangerous to compare anything of the modern age to the revolution in astronomy dating back to the time of Copernicus. This is not at all about the supposed lack of tolerance at the time, as it seems as if there was more than enough willingness to at least hear [...]

‘Dollar’ Tight Again, Though Maybe Wrong Fed Read

By |2014-10-31T15:24:07-04:00October 31st, 2014|Bonds, Commodities, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

It began more than a week before the FOMC meeting, as eurodollars again anticipated what the mood would be surrounding whatever the FOMC might say. “Dollar” conditions had run down significantly where the entire curve shifted lower (looser) for the first two weeks of October as doubts grew about the economy in the US and pretty much everywhere else. Right [...]

Europe ‘Forgets’ To Stress Gov’t Bonds

By |2014-10-27T15:56:57-04:00October 27th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

The problem with European monetarism is not that it is trying to swim against the tide of fragmented “markets” and national boundaries that represent very real hurdles in terms of legal and systemic bottlenecks. For the most part, everything that the ECB has tried, including a great deal that predates the bright spotlight on Mario Draghi, has led to precisely [...]

UST Warning In Vivid Detail

By |2014-10-27T14:52:02-04:00October 27th, 2014|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

Almost two weeks after the event, there is still more than a little nervousness about what took place on October 15 in UST trading – and for very good reason. Up to that point, proclamations about systemic liquidity degradations were just theoretical to most people. The reason was, and continues to be, that nobody seems to care about disruptions in [...]

What Magnificent (For Some) Complications

By |2014-10-24T16:00:30-04:00October 24th, 2014|Bonds, Commodities, Currencies, Federal Reserve/Monetary Policy, Markets, Stocks|

In July 2014, just as the dollar was beginning to tighten with what seems like an overly sensitive trigger, the US Treasury Dept’s Office of Financial Research published a paper by Zoltan Pozsar that attempted to map out the financial system as it actually exists (hat tip to W Kraus for sending it to me). The 67 pages of commentary [...]

Implications of Funding Market Asymmetry

By |2014-10-23T12:47:47-04:00October 23rd, 2014|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

While this morning’s post was more about longer-term implications of “dollar” changes, there are a couple of observations pertinent to the shorter-term that I think need consideration too. For whatever reason, whether it was, like September 4, 2013, an anticipation of countertrend “dovishness” on the part of the FOMC, the eurodollar market gained a sudden appreciation of the economic downside [...]

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