Economy

Nice Work

By |2019-09-18T17:04:03-04:00September 18th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

According to DTCC's repo #s, there's a good chance fed funds was outside the range today, too. It was put at 3% this afternoon despite this morning's FRBNY operation, which is still higher than Monday when EFF sat right at the upper bound.  https://twitter.com/JeffSnider_AIP/status/1174425376048787457 In case it wasn't clear, I was being sarcastic in the [...]

FOMC: Trust Us, Funding Pressures Don’t Really Matter

By |2019-09-18T16:36:00-04:00September 18th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before the repo rumble this week, Federal Reserve Chairman Jay Powell wanted to coast into a second rate cut on the comforting breeze of his insurance rhetoric. No longer one and done, that’s done, a second straight cut would be more consistent with a more forceful yet unnecessary policy response. Again, his publicly stated view [...]

Losing Control of Federal Funds: What’s Transmission Got To Do With It?

By |2019-09-18T11:47:17-04:00September 18th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

What’s transmission got to do with it? An odd question perhaps, but not when you step back and think about everything you’ve been taught or told about when it comes to this stuff. From the very beginning, they tell you unequivocally how the Fed is in the middle and everyone must simply obey. It does [...]

An Overlooked And Important Point: The Fed’s Overnight Repo Operation Had Less To Do With Repo Than You Are Led To Believe

By |2019-09-17T16:49:06-04:00September 17th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There is one additional important point to note in all this repo uproar. Why did the Fed conduct the overnight repo operation this morning? The answer isn’t what you might think. It sounds like officials particularly at the Open Market Desk sounded the alarm about repo and the FOMC forcefully responded. And if you think [...]

Nasty Number Four: Repo Chaos, TAF Makes A Comeback, and EFF Shows Us How Inept Officials Really Are

By |2019-09-17T11:58:32-04:00September 17th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There are seasonal bottlenecks which litter the calendar. Why did Lehman fail two weeks before the end of the third quarter of 2008? Bear Stearns, if you remember, came to the end of its rope…two weeks before the end of that year’s first quarter. And here we are again today two weeks before another quarter-end. [...]

Stuck at A: Repo Chaos Isn’t Something New, It’s The Same Baseline

By |2019-09-16T18:15:23-04:00September 16th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Finally, finally the global bond market stopped going in a straight line. I write often how nothing ever does, but for almost three-quarters of a year the guts of the financial system seemed highly motivated to prove me wrong. Yields plummeted and eurodollar futures prices soared. It is only over the past few weeks that [...]

China Nastier Number Four

By |2019-09-16T13:38:36-04:00September 16th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Officials in China seem to be taking a page out of Mario Draghi’s playbook. Before Europe was pushed to the bring of recession, the President of Europe’s central bank would downplay any weakness in the European economy. In 2018 especially, Draghi frequently referred to 2017 as if it was something special. No cause for concern, [...]

Where The Global Squeeze Is Unmasked

By |2019-09-13T17:34:45-04:00September 13th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Trade between Asia and Europe has dimmed considerably. We know that from the fact Germany and China are the two countries out of the majors struggling the most right now. As a consequence of the slowing, shipping companies have had to make adjustments to their fleet schedules over and above normal seasonal variances. It was [...]

Retail Math, Stock Sentiment

By |2019-09-13T15:42:53-04:00September 13th, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

According to the Census Bureau, auto sales in the US may be on the upswing. Rising 6.8% year-over-year in August, it was the highest rate in nearly three years for retail sales of automobiles. This follows an upward revised 6.3% increase during July, the best back-to-back months in the beleaguered sector since the end of [...]