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balance sheet capacity

The Real Money Doesn’t *Spread* Inflation

By |2022-02-21T18:38:16-05:00February 21st, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It was the clash of all clashes, the textbook up against practice in a real world falling apart. Theory’s chance to save the day and prove itself, what should’ve been the legend’s finest hour. Time to put up, or... On the one side, there was the “money” we’re all told is easily created, and on the other what may have [...]

The Money *All* Agrees: Taper Rejection Meets Policy-Error Error

By |2022-02-18T19:02:09-05:00February 18th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Balance sheet capacity as an intangible (and deeply misunderstood) monetary property is the biggest motivating factor behind changes in or to the offshore, shadow ledger-money reserve system. The eurodollar. Since it is a distributed ledger shared amongst, and kept by, the big-bank global banking cabal, its members’ ability to expand their own individual balance sheets contributes to the overall increase [...]

Hey Jay, Maybe Check The Swaps Before Committing to Taper

By |2021-09-21T20:11:51-04:00September 21st, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It was said to be something hugely significant, truly momentous - but only until it started to misbehave all over again. This was the summer of 2013, SHIBOR Summer in China and the misunderstood, mislabeled “taper tantrum” in the US$. Consistent with the latter’s more optimistic take on the world, the 30-year swap spread turned positive for the first time [...]

The Warehouse Gap Does Much To Fill In Why There Were Never Too Many Treasuries

By |2021-04-23T19:38:21-04:00April 23rd, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Long bond futures, open interest. There really shouldn’t be much to glean from just the raw count of US Treasury futures contracts at any given time, yet throughout the past quarter-century you could tell something was up whenever this particular contract’s open interest went up. More of long bond OI, the more it seemed (and still seems) trouble lurked (lurks).I [...]

Why *Only* That Specific One?

By |2021-04-14T19:49:23-04:00April 14th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On February 23, the US Treasury sold off $60 billion and change of 2-year notes (CUSIP 91282CBN0). This particular shorter-term instrument has been in the crosshairs of the reflation trade, lurching in and out of it going back to last October, perhaps even late September. Caught up being the immediate tenor following the bills which have been bid (for “some” [...]

Real Dollar ‘Privilege’ On Display (again)

By |2021-04-07T20:04:14-04:00April 7th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Twenty-fifteen was an important yet completely misunderstood year. The Fed was going to have to become hawkish, according to its models, yet oil prices crashed and the dollar continued to rise. Both of those things were described as “transitory” by Janet Yellen, and that they were helpful or positive (rising dollar means cleanest dirty shirt!), but domestically American policymakers’ clear [...]

Jay Powell’s Bad Cop Routine: Intentionally Pushing Banks Off the SLR ‘Cliff’

By |2021-03-19T17:10:16-04:00March 19th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve has allowed itself an image of a marshmallow when it comes to the banking system it is (one-third) charged with regulating. First and foremost, along with the two other (redundant) triplets, the OCC and FDIC, the US central bank is not a central bank at all; it is near exclusively a domestic bank regulator. And while “macroprudential” [...]

While Two ‘Fs’ In Cliff, There Isn’t In the SLR Heading Toward One

By |2021-02-19T18:02:42-05:00February 19th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

A few have asked, so I’ve written up what is actually a shorter piece on this SLR business is all about. First, SLR stands for Supplementary Leverage Ratio (and it’s not SLF, as I managed to leave two of the same typos in the main article referenced below, to the point the mistake made it into the headline). Parts of [...]

An (In)Opportune Moment To Review What September Repo Might Have Been Rehearsing

By |2020-03-03T19:22:21-05:00March 3rd, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When you focus exclusively on bank reserves, even when the answer is staring you in the face you just can’t appreciate it or decipher the implications. Nearly six months later, they still don’t know what happened in the repo market last September. By “they” I mean, of course, the Federal Reserve including all the presumably technically proficient operators at its [...]

De-dollarization By Default Is Not What You Might Think

By |2020-01-15T10:02:26-05:00January 14th, 2020|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Last month, a group of central bank governors from across the South Pacific region gathered in Australia to move forward the idea of a KYC utility. If you haven’t heard of KYC, or know your customer, it is a growing legal requirement that is being, and has been, imposed on banks all over the world. Spurred by anti-money laundering efforts [...]

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