fbpx

primary dealers

Just When You’ve Thought You’ve Seen It All

By |2017-12-04T17:18:07-05:00December 4th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

I could understand it if its track record was spotty, or partially mixed. But the level of denial runs deep and wide with the yield curve. There is a growing chorus of nonsense, really, which is attempting to spin the flattening as some kind of benign technical rotation that through illogical convolution equals the opposite of what is obvious. Let’s [...]

Can’t Forget About Dealers

By |2017-08-15T17:11:48-04:00August 15th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When the Federal Reserve was founded in 1913, there was no role for it in the marketing and selling of government debt. This wasn’t an oversight on the part of Congress. For more than two years before the Fed, the Treasury Department hadn’t issued any marketable instruments at all. In those days it just didn’t seem a necessary function. World [...]

An Inside Basis For Unfortunate Continuity

By |2017-04-12T15:48:53-04:00April 12th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Primary dealer holdings of UST securities have been on the rise again. This sort of warehouse activity is drastically misunderstood, exemplified best when last year around this time surging dealer inventory was blamed on those banks’ purported inability to sell off their holdings. It was an absolutely absurd idea for several reasons, but most prominently the overwhelming demand at the [...]

Benign Foreign Dollar Buffer or Systemic Collateral Issues, Continued Illiquidity and ‘Dollar Strain’?

By |2016-05-03T19:12:09-04:00May 3rd, 2016|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There isn’t a whole lot known about the Federal Reserve’s Foreign Reverse Repo accommodation, and I believe that is intentional. The rate which the Fed pays to “borrow cash” from foreign central banks and governments is unknown. What is known is just how much in total the Fed is “accommodating” foreign dollar business. This RRP, in sharp contrast to the [...]

Hoarding, Collateral and the Certain Indication of Balance Sheet Restrictions

By |2016-03-11T18:30:21-05:00March 11th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There is an ongoing mess in repo markets and not a lot of straightforward commentary about it. As usual, whenever any repo tenor trades highly special we hear only about the persistence and plethora of shorts betting on rate normalization. Since rates, overall, have done only the opposite going back to June 2014 and the start of this repo mess [...]

No Surprise To Find Dealers Hoarding For A Third Time

By |2016-02-08T13:03:56-05:00February 8th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

If the world is poised upon the precipice of “deflation” and the ugly economic consequences of reduced “money supply”, at the middle of all that are the primary dealers – still. While it is technically correct to claim that the Fed expanded its balance sheet to $4.5 trillion, with $2.4 trillion left after autonomous factors for bank “reserves”, that actually [...]

UST and Liquidity Factors

By |2015-05-13T17:08:48-04:00May 13th, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

It was another pretty volatile session for UST trading, including the 13:30 selloff showing up right on schedule. The open was bid rather heavily, likely due to the nasty retail sales figures that increase the probability of something more than a temporary economic slump, but selling appeared almost from the open. There was heavy buying again around 13:00 and the [...]

Razor Thin ‘Dollar’ And the FOMC’s Statement

By |2015-03-24T14:54:18-04:00March 24th, 2015|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Credit and funding markets have been pretty much defined by “dollar” behavior for most of March in the same manner that defined December and early October. At the outset, it looked as if credit markets had turned the “other” way with interest rates rising and some of the downstream “markets” no longer under such steady pressure. The culmination of that [...]

Go to Top