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Reflation

It’s A Rate Train Coming Your Way

By |2021-04-26T18:13:28-04:00April 26th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On December 26, 2018, the US Treasury sold off $41 billion in 5-year notes. “Only” $85.8 billion in bids were submitted, weakening the widely watched bid-to-cover ratio to a chatty 2.09. The prior sale of 5s had yielded a bid-to-cover of 2.495, nearly $100 billion in bids for $40 billion on offer, so something was clearly up. Had it been [...]

A Glut of February’s

By |2021-04-19T20:06:07-04:00April 19th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Ben Bernanke saw it even before he took over from Alan Greenspan. Like his “maestro”, however, Bernanke didn’t really know what to make of it. So, while early in 2005 Greenspan told of his version as an interest rate “conundrum”, his successor a month later tried to add more dimensions and details to the same puzzle via recognizing its clear, [...]

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” [...]

Fragility (脆弱性)

By |2021-04-13T19:16:45-04:00April 13th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

For a short while, with reflation being traded in almost every corner of the global bond market, the Bank of Japan started to get “those” questions again. Almost of the humble brag variety. A few years ago, Japan’s central bank had widened what it considered to be an acceptable trading range for its 2016 QQE addendum of Yield Curve Control [...]

Scorching, Blistering, Highest In A Decade! Powell’s The Voice of Reason Here?

By |2021-04-09T18:17:50-04:00April 9th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

If there is one thing Economists understand very well, it’s mathematics. This is practically all they do, and all that means much to their discipline. If there’s one thing Economists don’t seem either competent with or interested in, it’s the economy. The math is supposed to match the other’s reality, yet rarely does.There are times, however, when simple calculation is [...]

Soar or Sour: Short Run, *Then* What?

By |2021-04-06T18:32:13-04:00April 6th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The sound of economic sizzle finally within earshot, though perhaps nearly a year too late. PMI’s for the month of March 2021 were of the sort which should have come about in May and June 2020. The “V”-shaped recovery was much talked about at that earlier time, though in PMI terms (as well as regular “hard” data) the numbers fell [...]

Maybe The Biggest Challenge Is Not To Get Carried Away

By |2021-04-06T12:38:25-04:00April 6th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Like a child fixated on a shiny new toy, I was enthralled by trading in WTI futures on Monday. There are times when end-of-day closing prices just don’t capture the full extent of what actually goes on during the several hours of any regular session, and yesterday was certainly one of those times. We’ve been on top of front-end contango [...]

How Does Reflation Look From The Point of View of the One Market That Gets It

By |2021-03-30T20:25:14-04:00March 30th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Eurodollar futures are derivative, cash-settled contracts linked to 3-month LIBOR (forget about SOFR and the official hatred of this offshore dollar rate regime). Though that rate acts independently especially at the worst times (thus, the hate), it is heavily influenced by the front-end monetary alternatives set by the Federal Reserve’s monetary policy (IOER, RRP). Because of this, LIBOR kind of [...]

Kiwi Busted QE And Its Relation To The Reflation Story

By |2021-03-24T18:33:32-04:00March 24th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In theory, it goes like this: QE or any sort of large-scale asset purchase (LSAP) undertaken by a central bank is needed during times of trouble in order to reduce interest rates in general. Buying bonds seems like it would lower yields, and lower yields mean more accommodative credit, therefore a boost to the real economy.So simple, straightforward, and intuitive, [...]

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