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Quarter End Repetition

By |2016-03-31T17:54:59-04:00March 31st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It is quarter end, so illiquidity irregularity is to be expected except that it isn’t irregular really. Eurodollar futures have been heavily bid for three days in a row now, leaving four consecutive up days for the first time since the liquidations. And because I am a sucker for fractal behavior, repo markets proved that quarter end is still what [...]

It Starts: Junk Bonds ‘Contained’

By |2016-02-01T18:31:02-05:00February 1st, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

To an economist, the economy can bear no recession. In times of heavy central bank activity, an economy can never be in recession. Those appear to be the only dynamic factors that drive economic interpretation in the mainstream. And they become circular in the trap of just these kinds of circumstances – the economy looks like it might fall into [...]

The True And Hidden Menace of Liquidations

By |2016-01-20T16:50:50-05:00January 20th, 2016|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Today’s radical reversal in stocks notwithstanding, the continuing hits of liquidations are not achieving their settled ends. In purely financial terms, the entire process of liquidation is to renew a settled state. Local imbalances force restriction of financial resources (what used to be money but now is something recognizable as such but truly not money) which triggers a cascade of [...]

Trying to Calibrate Fragmentation

By |2015-12-29T17:28:48-05:00December 29th, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Repo rates were once again today above the upper “ceiling” of the FOMC’s intended corridor, marking three consecutive trading days exploring territory not meant to be reserved for secured overnight lending. The MBS GC rate hit 60 bps, surging with agency GC likewise nearing 60 bps. The UST rate fell slightly but remained just above the 50 bps upper limit. [...]

Bottleneck Review

By |2015-09-15T18:33:15-04:00September 15th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

Being September 15 and thus entering the final two weeks of the quarter, it seems appropriate to review all the liquidity bottlenecks (or at least the symptoms of them). Since GC repo rates found themselves retracing the end of Q1 at the end of Q2, it feels appropriate to start there. As you might expect, the repo rates thus far [...]

Why It’s The ‘Money’ Stupid

By |2015-09-11T18:04:52-04:00September 11th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

When grounded in the framework of traditional banking, wholesale dynamics can be quite confusing to the point of being impenetrable. Nowhere is that more the case than the wholesale ideas of currency and what counts for establishing chains of traded liabilities. In the traditional banking/monetary framework, everything is reducible to money; all else are just derivative claims on it. The [...]

The Recent ‘Dollar’ And The Corporate Bubble

By |2015-08-07T11:06:16-04:00August 7th, 2015|Bonds, Economy, Federal Reserve/Monetary Policy, Markets|

Given the outward expression of the “dollar” in various proxies, it is not surprising to see the inward development continue in the same pattern. Interbank rates and estimates are in many cases surging, particularly in the second half of July which matches the acceleration in the outward projections. This direction is nearly uniform, which confirms that the latest “dollar” problems [...]

There Really Isn’t Supposed to Be A Repo Cycle

By |2015-07-22T16:22:57-04:00July 22nd, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

Having past the fifteenth of the month, the first month in the new quarter, the repo “cycle” for the quarter end has completed. Repo rates have followed almost exactly the same pattern as three months earlier, pivoting on both the quarter end and the 15th each time. This is not just unusual, it shouldn’t happen. Compared with other quarter-end periods, [...]

Good-bye April 15 and Thanks for Nothing But Leftovers

By |2015-04-15T17:06:30-04:00April 15th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

I had hoped that something would have happened by now and that April 15 would follow more closely the October 15 and January 15 events, if only for the sake of experimentation. We don’t really need any additional illiquidity and certainly nothing as globally severe as those, but with function the way it is and everything so stretched and imbalanced [...]

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