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negative interest rates

You Need NIRP But Because NIRP You Then Need To Lessen NIRP; Or, Just Trust US, This Stuff Just Works

By |2020-08-13T19:29:59-04:00August 13th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Bank of Japan has been paying Japanese banks a supplement on loans they collateralize with the central bank. This program is not new, announced first during the depths of COVID earlier this year, but its growing popularity has demanded attention. In addition to this market “support”, in April BoJ added a bonus of 10 bps to each pledged loan.The [...]

They’re Here: Negative UST Yields Finish The Collateral Case

By |2020-03-18T12:16:04-04:00March 18th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Negative Treasury rates are here. The front end of the yield curve fell below zero for the first time, the equivalent yield for the 4-week T-bill at -0.025% as I write this. The benchmark 3-month yield is straddling zero (while 3-month LIBOR jumps, as noted yesterday). These are not surprising developments. They are to Jay Powell and the people who [...]

What Matters…and What Doesn’t

By |2017-03-30T16:19:00-04:00March 30th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Far be it for me to defend Mario Draghi, but earlier this month when it was revealed that Eurozone inflation burst above the 2% target level for the first time in four years the mainstream characterized his demeanor as being more than what it really was. That says something about the media as well as Draghi, where the former is [...]

Consensus Inflation (Again)

By |2017-03-27T13:11:07-04:00March 27th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Why did Mario Draghi appeal to NIRP in June 2014? After all, expectations at the time were for a strengthening recovery not just in Europe but all over the world. There were some concerns lingering over currency “irregularities” in 2013 but primarily related to EM’s and not the EU which had emerged from re-recession. The consensus at that time was [...]

Liquidity Risk Is Very Real And Really Not That Hard To Spot And Define

By |2016-08-23T18:46:00-04:00August 23rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Going back to Japan for a third time today (it is more than deserved), at least in the setup, the Financial Times on August 1 astutely picked up what the rest of the mainstream media missed about the last BoJ policy moves. They correctly judged the “dollar” intentions, but also that it wasn’t nearly enough, as I wrote earlier. However, nobody [...]

Clues to the Origins And Stubbornness of the ‘Rising Dollar’

By |2016-08-23T13:27:39-04:00August 23rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On March 9, 2016, front month trading for Japanese government bond (JGB) futures was halted at 12:32 pm Tokyo time. Selling had become intense, tripping the Osaka Exchange’s dynamic circuit breaker. The total length of the halt was just 30 seconds, but fingers were already being pointed in the direction of the BoJ. More than four months later, on July [...]

NIRP Is So Simple

By |2016-02-03T11:56:03-05:00February 3rd, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

Why won’t monetary policy just work as designed? It sounds so utterly simple: To review: Interest rates are the price of lending and saving money. When interest rates throughout the economy are low, banks charge less for loans and individuals have less incentive to save; when they're high, lenders charge more and individuals save more. This is why central banks [...]

Suicidal Tendencies, But ‘New and Improved’!

By |2016-02-03T11:14:32-05:00February 3rd, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Advertising in the modern age is an extremely difficult task with all the clutter and noise. If you hadn’t noticed, it leaves many products experimenting with packaging in order to sell “new and improved.” The “easy pour spout”, for instance, became commonplace as if the old manner of detergent weren’t easy or comfortable to begin with. I seriously doubt that [...]

That Didn’t Take Long

By |2016-01-29T18:13:30-05:00January 29th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

It wasn’t in any way magnanimous for the FOMC to state clearly what everyone already knew without any need for aid of GDP calculations. The policy statement for its January 2016 meeting included language that mitigated, if not fully than significantly, the continued reliance on labor indications alone. The Fed says the labor market continues to point in the right [...]

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