With the 7s10s already inverted, and the 5s today mere bps away, making a macro case for the distortion isn’t too difficult. Despite China’s “upside” economic data today, even the Chinese are talking more about their downside worries (shooting/hoping for “stability”) than strength. In the US or Europe, no matter the CPIs in either place there are cyclical (not just [...]
At first glance, or first exposure to this, there doesn’t seem to be any reason why all these so many pieces could be related. Outwardly, from the mainstream perspective, anyway, you’d think them random, and even if somehow correlated they’re supposed to be in the opposite way from what’s happened. Too much money, they said. It began with the Fed’s [...]
The most common explanation for UST repo fails is that short sellers become an imbalance in the market for Treasuries. Convinced (isn’t everyone?) interest rates have nowhere to go but up and these instruments are doomed, therefore ripe to profit from the destruction, short selling sharks supposedly swoop in. Since they’ve borrowed UST’s they don’t own, the herd is susceptible [...]
Why are US banks borrowing hundreds of billions of US “dollars” (quotation marks fully deserved given the nature of these borrowings which are neither physical currency nor easily identifiable even on the global ledger, too many classified here as “other”) from themselves? Technically, for regulatory and accounting purposes “American” banks (a classification which includes domestic subsidiaries of foreign banks) are [...]
What would it look like if the Treasury market was forced into a cross between 2013 and 2018? I think it might be something like late 2021. Before getting to that, however, we have to get through the business of decoding the yield curve since Economics and the financial media have done such a thorough job of getting it entirely [...]
It gets even more interesting in the bill market, not that anything here has been unexpected. And since this is the same week as Evergrande, still no hint of spillover and tightening, at least not beyond what has become typical.That means mostly on the supply side. Treasury Secretary Yellen is losing breathing room fast, meaning she’s forced to dig further [...]
In the absence of the 42-day Cash Management Bill, all that demand for it has to go somewhere. Treasury stopped offering this issue ten days ago on August 17, which is when 4-week bill yields dropped more persistently into the 3s (bps). Yellen’s Department will try to supplement next Tuesday by reopening the August 10 issue of the 42-day, selling [...]
A momentous day, for sure, but one lost in what would turn out to be a seemingly endless sea of them. October 8, 2008, right in the thick of the world’s first global financial crisis (how could it have been global, surely not subprime mortgages?) the Federal Reserve took center stage; or tried to. Having bungled Lehman, botched AIG, and [...]
This one wasn’t nearly so perfect as the scramble for collateral had been a few Tuesdays ago. Last night’s, however, did have a sizable, visible contribution from the gold marketplace. That’s a significant tell even if it didn’t necessarily correlate by the minute with T-bills and other collateral numbers.In this instance if only because the gold “slam”, which was enormous, [...]
Ceremony and ritual are not just important concepts for priming and keeping faith, they are absolute essentials. There’s a reason why cult leaders make themselves appear - at every instance - indispensable while at the same time keeping their masses busy with nonsense. Can’t ever permit thinking too much lest the house of cards crash downward at the first slight [...]
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