reverse repo

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 [...]

China’s Monetary Shell Game (Confirmed for Step 2)

By |2018-05-21T12:04:31+00:00May 21st, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Chinese bank reserves contracted in April 2018 for the first time in almost two years. The decline was small, just 0.2%, but it is still represents a significant deviation from the limited growth since the turmoil in 2015 and early 2016. The decline in reserves further corroborates our theory of events. To briefly review, China [...]

Chart of the Week: PBOC Clumsily Stumbles Into Step 1

By |2018-05-11T17:04:19+00:00May 11th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

A few weeks ago, the PBOC stunned many mainstream observers by reducing the RRR. It cut against the preferred narrative that the central bank was “tightening” in anticipation of an economic and therefore inflationary breakout (labor shortages, don’t you know). It didn’t seem to make sense. From the perspective of globally synchronized growth, it wouldn’t. [...]

China’s Monetary Shell Game

By |2018-04-17T17:57:08+00:00April 17th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Throughout much of last year, we were told repeatedly that the PBOC was tightening monetary policy. China’s central bank had raised its reverse repo rate twice early on, and then once more last December (and would do so again just last month). These moves coincided with Federal Reserve “rate hikes”, seemingly in line with the [...]

Chinese Really Are Not Tightening, Though They Would Be Thrilled If You Thought That

By |2017-12-18T17:25:09+00:00December 18th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Why would any central bank try to disguise the fact that it is being highly accommodative in its own money markets? That would be a strange place to start, made all the more so by the further observation the same central bank is perfectly happy if you thought it was doing the opposite. Cryptic introduction [...]

The Fed Tries To Tighten By Rates, But The System Instead Tightens By Repo

By |2017-08-17T19:01:29+00:00August 17th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Fed voted for the first federal funds increase in almost a decade on December 15, 2015. It was the official end of ZIRP, and though taking so many additional years to happen, to many it marked the start of recovery. The yield on the 2-year Treasury Note was 98 bps that day. A lot [...]

China’s Banks Deliver RMB In June

By |2017-07-25T18:57:50+00:00July 25th, 2017|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Updated statistics from the People’s Bank of China shed some light on changing money conditions in RMB. The Big 4 State-owned banks have been the primary liquidity conduit for all policies and activities going back to 2014. These institutions had been since the middle of 2016 increasingly squeezed as to excess funding available to be [...]

Follow-Up on Bills; Supply Side

By |2017-06-26T16:51:54+00:00June 26th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Returning to the theme of the parallel evolutionary developments in the early 20th century as compared to the last decades of it, in 1908 famed Gilded Age industrialist Andrew Carnegie wrote what seems today a misplaced article for New York Outlook magazine. The steel magnate lamented the state of American banking, which he called within [...]

Chart of Last Week: In Need of Official Address

By |2017-06-26T11:56:08+00:00June 26th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

According to the US Treasury, the calculated equivalent treasury bill yield for the 4-week maturity was 76 bps at Friday’s close. At such a short time frame there isn’t actually a single instrument that creates the rate, more of an amalgamation (spline) of various 4-week securities staggered on their own. The bill maturing this week, [...]

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