bank reserves

China Reopens With Another Dollar Warning

By |2018-10-08T19:11:16+00:00October 8th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s one of those useless explanations that while technically true tells us nothing of value about the situation. The Chinese are never boring when coming back from a Golden Week holiday. This weekend was no exception, China’s reopening bringing with it the news of yet another cut in that country’s bank reserve requirement ratio (RRR). [...]

A Long Dollar Story: China’s Short Profits, Prices, and Producers

By |2018-09-10T16:59:18+00:00September 10th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For the first half of the Great “Recession”, China and the rest of the EM world seemed immune. It was American subprime mortgages that we were told was causing all the problems, and if European banks had somehow gotten themselves entangled in the rotten real estate mess so much the better for where growth was [...]

The Smoke Thickens In China

By |2018-08-13T11:54:23+00:00August 13th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

A major part of any yield curve is inflation expectations. Nominal growth particularly toward the longer end of curves sets the agenda for trading. But further out there are several confluences that may cause distortions. For Economists, these are conundrums. There are times, however, when curve dynamics remain pretty simple. These are not usually the [...]

Beware The Collateral Underneath The Top of GDP

By |2018-07-24T18:31:40+00:00July 24th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Why so much wholesale emphasis on collateral? Easy. The monetary history of recent times hasn’t been very kind in that regard. On the one hand, the repo market has become so much more important than it was, as scared interbank participants fled unsecured eurodollar markets eleven years ago next month for the presumed shelter of [...]

Gold, Dollar, and Repo: Who Cares About Taper, or QE?

By |2018-07-17T18:49:40+00:00July 17th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s funny how these things work. He didn’t actually say the word “taper”, at least not when the frenzy first started. The very idea of the “taper tantrum” was the media’s work, the easy slogan that could be used as shorthand for the conventional explanation. The economy was improving, everyone was told and easily believed, [...]

The Remarkable And Lengthy Consistency of Repo

By |2018-06-25T18:11:32+00:00June 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before August 2007, US$ money markets operated efficiently and predictably. They behaved according to a rigid hierarchy, which is a good thing no matter how it may sound. This inflexibility in the context of funding markets was exactly what we would want. Arbitrage opportunity was responsible for enforcing the rules. One simple example was the [...]

Further Early Confirmation on PBOC Intentions

By |2018-06-22T13:08:25+00:00June 22nd, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The level of Chinese bank reserves fell again in May 2018. Year-over-year, what is technically classified as Deposits of Other Depository Corporations on the PBOC’s liability (money) side of its balance sheet contracted by 1%. This advances a very different trend for reserves, breaking what had been a more continuous and determined effort toward at [...]

Chinese Inflation And Money Contributions To EM’s

By |2018-06-12T18:40:36+00:00June 12th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The People’s Bank of China won’t update its balance sheet numbers for May until later this month. Last month, as expected, the Chinese central bank allowed bank reserves to contract for the first time in nearly two years. It is, I believe, all part of the reprioritization of monetary policy goals toward CNY. How well [...]

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