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Bills Down, RRP Up

By |2021-07-27T19:58:24-04:00July 27th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve has done us a solid favor by opening wide its RRP window. Quite by accident, obviously, these policymakers hardly useful monetary stewards, we now have another indication, and a more direct one (though still indirect overall), relating on the surface two seemingly very different factors. The correlation found there between T-bills and that has increased the visibility [...]

Golden Collateral Checking

By |2021-07-26T19:22:05-04:00July 26th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Searching for clues or even small collateral indications, you can’t leave out the gold market. We’ve been on the lookout for scarcity primarily via the T-bill market, and that’s a good place to start, yet looking back to last March the relationship between bills and bullion was uniquely strong. It’s therefore a persuasive pattern if or when it turns up [...]

Lower Yields And (fewer) Bills

By |2021-07-19T19:55:10-04:00July 19th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Back on February 23, Federal Reserve Chairman Jay Powell stopped by (in a virtual, Zoom sense) the Senate Banking Committee to testify as required by law. In the Q&A portion, he was asked the following by Montana’s Senator Steve Daines: SENATOR DAINES. I just was looking at the T bill chart and noticing since the 1st of February, the one [...]

RRP No Collateral Coincidences As Bills Quirk, Too

By |2021-07-09T19:50:23-04:00July 9th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

So much going on this week in the bond market, it actually overshadowed the ridiculous noise coming from the Fed’s reverse repo. Some maybe too many want to make a huge deal out of this RRP if only because the numbers associated with it have gotten so big. To end Q2 2021, financial counterparties “lent” just about $1 trillion to [...]

Eurodollar Curve Quirk Trivia, But Not Trivial To Anti-Inflation

By |2021-07-07T19:40:25-04:00July 7th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Quirks or kinks in the eurodollar futures curve are nothing new, materializing from time to time as much for technical reasons as anything else. Still, there are those instances – such as June 2018 – when these represent meaningful changes in outlook and condition. Back in the middle of that year, the sudden inversion in the curve along the 2020-21 [...]

Indirect *Bill* Bidders Aren’t Who You Think, Helping Explain the Anti-Reflation Behind Reverse Repo

By |2021-06-21T17:36:59-04:00June 21st, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Following this morning’s Treasury bill auctions, each of the last three for the three shortest maturities (4-week, 8-week, 13-week) have each priced to yield less than the new reverse repo “floor” rate set by the Federal Reserve last Thursday. The first two of those, a 4-week and an 8-week, took place on the new RRP’s first day. The latest is [...]

The FOMC Accidentally Exposes Itself (Reverse Repo-style)

By |2021-06-17T19:10:11-04:00June 17th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Initially, the dots got all the attention. Though these things are beyond hopeless, the media needs them to write up its account of a more fruitful monetary policy outcome because markets continue to discount that entirely. Dots look like inflationary success if possibly even now more likely, whereas yields and especially bills have (re)taken a more skeptical approach pricing almost [...]

No Reserving Interpretation About Reverse Repo Collateral Connection(s)

By |2021-05-26T17:04:58-04:00May 26th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Why are Treasury bills the best of the best, the purest of the most pristine? The better part of the answer comes in the form of a mere three letters: O, T, and R. Those happen to stand for on-the-run which in repo simply means dependably liquid. OTR securities are those most recently auctioned thereby the specific securities which have [...]

Bill Yellen

By |2021-04-30T19:53:28-04:00April 30th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Treasury Secretaries, like Federal Reserve Chairmen, they don’t talk much about or pay much attention to the market’s need for collateral. They may pay some, but not specifically collateral if only under the vaguely defined category of “market consideration” when setting auction supply. Collateral shortages have come and gone, however dreadful, never eliciting a direct response insofar as supply has [...]

TGA & RRP, Bills Fed Up

By |2021-03-17T19:36:37-04:00March 17th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When the 4-week Treasury bill equivalent yield traversed the so-called RRP “floor” back in 2017, hardly anyone noticed. With rates nominally rising due to the Federal Reserve’s historically dovish hawkish normalization push, it was all a jumbled mess. What if the 4-week bill rate (or 3-month) was somewhat less than this RRP thing-y, they were all moving anyway.Even as the [...]

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