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LIBOR

The Global Engine Is Still Leaking

By |2020-04-13T18:48:13-04:00April 13th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

An internal combustion engine that is leaking oil presents a difficult dilemma. In most cases, the leak itself is obscured if not completely hidden. You can only tell that there’s a problem because of secondary signs and observations.If you find dark stains underneath your car, for example, or if your engine smells of thick, bitter unpleasantness, you’d be wise to [...]

Fragile, Not Fortified

By |2020-04-07T19:31:36-04:00April 7th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On Sunday, Argentina’s government announced it was postponing payment on any domestically-issued debt instruments denominated in foreign currencies. That means dollars, just not Eurobonds. At least not yet. In response, ratings agencies such as Fitch declared the maneuver a distressed debt exchange.In other words, technically a default.Though this move was expected, still you have to appreciate the sensitivity. Argentina may [...]

Banks Or (euro)Dollars? That Is The (only) Question

By |2020-04-01T17:02:26-04:00April 1st, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It used to be that at each quarter’s end the repo rate would rise often quite far. You may recall the end of 2018, following a wave of global liquidations and curve collapsing when the GC rate (UST) skyrocketed to 5.149%, nearly 300 bps above the RRP “floor.” Chalked up to nothing more than 2a7 or “too many” Treasuries, it [...]

It’s Not About Jobless Claims Today, It’s About What Will Hamper Job Growth In A Few Months

By |2020-03-26T17:45:09-04:00March 26th, 2020|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

You’ve no doubt heard about the jobless claims number. At an incomprehensible 3.28 million Americans filing for unemployment for the first time, this level far exceeded the wildest expectations as the economic costs of the shutdown continue to come in far more like the worst case. And as bad as 3mm is, the real hidden number is likely much higher. [...]

Not Good: Eurodollar Futures Curve Sells Off, At The FRONT

By |2020-03-25T13:21:01-04:00March 25th, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

If the Fed has promised to print an unlimited supply of money, then why are inflation expectations at crisis lows and falling? At the same time, there are still-growing signs of illiquidity and an interbank crackup. Bazooka after bazooka, yet they don’t seem to be having much effect. That’s true domestically but more so offshore. You may have seen references [...]

Right on Cue, Low Money Rates Are Not What You Might Think

By |2020-03-23T17:12:12-04:00March 23rd, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For several weeks now, the Federal Reserve has launched one bazooka after another. Officials there keep reassuring the markets, and the public, they’ve got an unlimited toolkit. However, the fact that they feel it necessary to keep showing you is a warning sign, especially how quickly each one is forgotten and overshadowed by the latest Big New Thing. The reason [...]

Is GFC2 Over?

By |2020-03-17T19:47:28-04:00March 17th, 2020|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

Is it over? That’s the question everyone is asking about both major crises, the answer is more obvious for only the one. As it pertains to the pandemic, no, it is not. Still the early stages. The other crisis, the global dollar run? Not looking like it, either. Stocks rebounded because of “major helicopter stimulus” or because that’s just what [...]

Why So Much Fuss Over SOFR?

By |2020-01-16T17:56:28-05:00January 16th, 2020|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

More than two years into the SOFR regime, it’s not really going all that well. Adoption remains, shall we say, questionable and uncertain even though, everyone says, LIBOR is on its way out and the Secured Overnight Financing Rate is the future. Jumbled together by the Fed’s New York branch, the latter is, we are told, superior in every conceivable [...]

The Speed of Sour: LIBOR Now Inverted, Too

By |2019-06-25T17:13:35-04:00June 25th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Last week, for the first time since February 2008, the LIBOR curve inverted. The 3-month tenor has been on the move downward for some time. The 1-month rate has been gentler in its slope. Last Thursday, the two finally crossed. As unnatural as inversion in the UST curve or elsewhere, it’s another sign of imminent rate cuts. I am somewhat [...]

Federal Funds Is Not Falling With The Rest of Them

By |2019-06-24T18:57:47-04:00June 24th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s difficult a lot of times to easily and succinctly describe what’s going on inside a monetary system that; 1. Spans the entire world, easily jumping across if not erasing geographical boundaries; 2. Is located in the shadows, leaving us with no direct data or statistics; 3. Often works in a dizzying array of complexities. I have to believe that [...]

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