That the repo market, as noted yesterday, has been beset by a persistent collateral shortage is relatively uncontroversial. Where once large blocks of MBS tranches were central to interbank flow and funding, their absence is still a fact of operation though that repudiation was a very long time ago. Even with that backdrop, however, it doesn’t explain a whole lot [...]
It wasn’t the introduction of statistics that led to the dire state of “science”, rather it was the jettison of common sense in favor of, and the total deference to, statistics. This was not a single event or a clean break, of course, as it happened slowly over decades. But in the 21st century what is often talked about and [...]
If markets have rebounded today after the sustained selloff on fresh “stimulus” hopes, then one would have to wonder immediately what the background fundamentals might be. Setting aside all notions of past “stimulus”, the call for more would seem to suggest, quite strongly, something far, far less than desirable. Yet, in the same breath economists and brokerage firms would have [...]
Behind our new paywall, I have been documenting the behavior of “dollar” money markets as they relate to China and elsewhere (global, general liquidity) but recent data in repo demand a more open airing. There are numerous indications that US$ markets are a total mess, none more so than repo. That starts with GC repo rates that remain above the [...]
“We don’t exactly know how it will work” should be stamped upon every message coming from the policymaking apparatus from this point forward, and then retroactively applied to every message in the age of risk and rate repression. Action in short-term money markets has heated up yet again, and that is not a positive statement toward vital function. To “exit” [...]
The ECB continues to sell the recovery in Europe despite any actual pickup in activity, Germany excepted. In financial terms, which are all that matter these days for policymakers, lending continues to contract. Despite the outward appearance of asset prices and certain economic accounts, there is no intent to extend further credit across the European zone. The latest figures through [...]
I don’t want to devolve into a Clintonian argument over the basic meanings of certain words, but that may be the best course in analyzing and discussing Europe’s circumstances in the very new age of negative interest rates. Reuters says there is “clear proof” that Draghi’s desperation and new bluff is “gaining traction.” An all-time low for euro zone money [...]
Yesterday the Fed conducted the first test of its newly-minted Fixed-Rate Reverse Repo program. The auction drew $11.809 billion in bids (all accepted, thus the “fixed rate” rather than “fixed allotment”) at 0.01%. Since this is a reverse repo, the Fed is “borrowing” cash from the system, collateralized by the UST’s in its SOMA holdings. Most commentary continues to focus [...]
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