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Repo

A TIC Look At Qualitative Contraction

By |2017-11-17T12:37:54-05:00November 17th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The latest update of the Treasury Department’s Treasury International Capital (TIC) estimates clarified a few things. To begin with, for the month of September the Chinese sold UST’s again for the first time in seven months. Between the end of January and the end of August, the Chinese had added $149.4 billion in UST holdings. In September, however, the balance [...]

TIC For August (China’s Belgian Hong Kong Dollars)

By |2017-10-23T18:08:58-04:00October 23rd, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Chinese have been on a UST buying spree of late, having announced to the world several months into it that they were intent on keeping it going. The idea in publicly endorsing and really highlighting their official activity was as a currency policy – to stabilize CNY against its highly disruptive tendency toward devaluation (which isn’t really devaluation). How [...]

TIC For August (Background)

By |2017-10-23T18:09:31-04:00October 23rd, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Treasury International Capital (TIC) report produced somewhat of an anomaly in its update for August 2017. There was a lot going on during that month, mostly as UST yields fell (even though interest rates have nowhere to go but up, supposedly) while CNY continued its blistering ascent. As to the latter, it was quite clear by then Chinese actions [...]

Dollar Denial

By |2017-10-18T12:50:45-04:00October 18th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

At this point in the longer term process of unwinding the Fed’s prior emergency activities, the yield curve was supposed to flatten. That was the plan all along. If monetary policy was successful, or had even run into just dumb luck somewhere in the last ten years, here where policymakers declare the economy to be short rates would be moving [...]

Three Straight Weeks Can’t Be Ignored

By |2017-10-02T16:59:42-04:00October 2nd, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve Bank of NY reported on Friday that repo fails for the week of September 20 were $359 billion (combined “to receive” plus “to deliver”). That’s the second highest weekly total of this year, following $435 billion fails recorded just two weeks earlier. The week in between those two was also high, tallying $325 billion. That makes for [...]

If They Wish To Replace LIBOR With Repo, They Should Already Start Thinking About Repo’s Replacement

By |2017-09-18T17:00:51-04:00September 18th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Sometimes you just have to laugh. A lot has been made on the inside of LIBOR’s assumed demise. The suite of interest rates is not being discontinued really, merely relegated to the backbench. As usual, the rationale for doing so is perfectly sound: As noted by the Financial Stability Board’s Market Participants Group, there are many current uses of LIBOR [...]

It Was Collateral, Not That We Needed Any More Proof

By |2017-09-18T16:20:49-04:00September 18th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Eleven days ago, we asked a question about Treasury bills and haircuts. Specifically, we wanted to know if the spike in the 4-week bill’s equivalent yield was enough to trigger haircut adjustments, and therefore disrupt the collateral chain downstream. Within two days of that move in bills, the GC market for UST 10s had gone insane. To be honest, it [...]

Wherefore Art Thou Collateral?

By |2017-09-07T16:40:36-04:00September 7th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The US Treasury as a result of the government’s bloated response to the Great “Recession” has been forced in notes and bonds to reopen their auctions each and every month. Before then, reopenings were less frequent. They weren’t infrequent, but the Treasury wasn’t just auctioning 10s every month. In 2007, for example, the Department conducted four quarterly auctions and one [...]

Moscow Rules (for ‘dollars’)

By |2017-08-29T18:53:31-04:00August 29th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In Ian Fleming’s 1959 spy novel Goldfinger, he makes mention of the Moscow Rules. These were rules-of-thumb for clandestine agents working during the Cold War in the Soviet capital, a notoriously difficult assignment. Among the quips included in the catalog were, “everyone is potentially under opposition control” and “do not harass the opposition.” Fleming’s book added another, “Once is an [...]

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 [...]

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