liquidity

Not A Good Start For China’s Third R

By |2018-10-17T16:39:56+00:00October 17th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

File it under “what were they thinking?” In March 2015, confronted by a severe external monetary squeeze, the PBOC made a truly radical choice. Maybe it was that for a few months anyway things looked a little better. The eurodollar system had practically melted down globally first on October 15, 2014 (collateral) and then in [...]

The Conspicuous Consistency of Curves

By |2018-08-20T17:03:19+00:00August 20th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It’s not that curves are flattening. It’s where they are. There’s really no mystery surrounding any of this. The “conundrum” arrives only when starting from the orthodox perspective; the one derived from Economists even though they don’t understand the bond market in the slightest. Short-term rates tend to “obey” central bank signals because central banks [...]

A Derivatives View On Q1 That Might Help Explain Q2 (and after)

By |2018-07-13T18:52:28+00:00July 13th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Morgan Stanley is bit more complicated as a derivatives dealer than the Big 4. Those other banks hold most of their books at their bank subsidiaries. In this case, the term bank actually means something, the legal distinction of a depository institution. Each of the four banks, JPM, C, GS, and BofA, have a holding [...]

Big Mama Leaves Huge Footprints Stepping All Over ‘Devaluation’

By |2018-06-27T19:09:41+00:00June 27th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Not a good day to be a global central bank. Competitive devaluations all around? Kidding aside, it’s getting serious in China. CNY DOWN = BAD, so says Big Mama. "The kind of dollar selling from that bank was so aggressive that we knew instantly that it must be from the Big Mama," said a Shanghai-based [...]

Revisiting China and ‘Devaluation’ As China Revisits ‘Devaluation’

By |2018-06-25T13:21:27+00:00June 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When the Chinese yuan suddenly plummeted in mid-August 2015, the world looked on in stunned confusion. It didn’t make sense. The global economy was about to take off, they thought, and it wouldn’t be doing that without China’s vast anticipated contributions. Such a large move in such a short time frame for a major currency [...]

EFF Watch, Or Is It IOER Watch?

By |2018-06-22T16:09:37+00:00June 22nd, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

How bereft of ideas might they have to be to fall back on IOER? It’s scandalous, really. But the Federal Reserve in terms of intellectual property belongs on the TV program Hoarders. They never throw anything away, so attached do they become to whatever ineffective idea implemented at any time. Practical experience is in their [...]

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 [...]