Well, I finally got it. I've been fighting COVID for the last week and while most of my symptoms have improved, I am not 100% yet. My goal from the beginning of COVID was to avoid it, if at all possible, until it became endemic and less lethal. It seemed logical to me, a layman, that it would follow this [...]
It’s not just the 4-week T-bill rate which is defying the Fed’s illusion of control, though that’s where the incidents are most evident. The front bill is nowhere close to the official RRP “floor” which can only mean one thing: collateral shortage, a large and persistent liquidity premium. Therefore, the further under said floor, the more the competition for the [...]
You might not know it, but front-end T-bill yields are not the only market spaces which are making a mockery of the Federal Reserve’s “floor.” There are others, including the same money number the same Fed demanded the world (or whatever banks in its jurisdiction it could threaten) ditch LIBOR over. Yes, SOFR.I’ve repeatedly highlighted the 4-week Treasury bill simply [...]
Though I’d like to say it was because of some inside connection, or even clairvoyance, it was just random coincidence. I wrote on Monday of the updated sordid details behind SOFR’s unsuitability and largely the rejection of it in favor of keeping LIBOR (or maybe adopting something else). It’s not that the government’s handpicked replacement won’t work, it can’t work. [...]
To go back only to last November, lost amidst the elections and then understandably overwhelmed by vaccine euphoria, the SOFR saga took an expected turn. It was predictable especially given the realities of the situation behind this unforced string of errors. Central bankers and their Economists are, we’re constantly told, the best and brightest, these most capable of monetary stewards [...]
The problem regulators have had with LIBOR has next to nothing to do with that whole scandal. Even the bankers who ended up going to jail did so based (largely) on misleading emails (just four, in one guy’s case). What constitutes a “representative” rate anyway? Your opinion might differ from mine or the other bank reps on the LIBOR panel, [...]
Sometimes, the government will tell you a lot when it really doesn’t want to tell you anything. It’s not what they say, but what they don’t. In the case of the Treasury Department, there was a small, seemingly nondescript morsel buried down underneath the rest of its more immediately consequential next-quarter projections. While focused, quite rightly, on the scaling back [...]
There are times when regulators are the adults in the room, spanking the banking system full of little petulant children who absolutely do require some disciplining. Take away their prop trading abilities or change the weighted calculation for some asset class or other. Maybe even some liquidity rules. The banks will stomp their feet and pitch a fit, but the [...]
You’ve no doubt heard about the jobless claims number. At an incomprehensible 3.28 million Americans filing for unemployment for the first time, this level far exceeded the wildest expectations as the economic costs of the shutdown continue to come in far more like the worst case. And as bad as 3mm is, the real hidden number is likely much higher. [...]
More than two years into the SOFR regime, it’s not really going all that well. Adoption remains, shall we say, questionable and uncertain even though, everyone says, LIBOR is on its way out and the Secured Overnight Financing Rate is the future. Jumbled together by the Fed’s New York branch, the latter is, we are told, superior in every conceivable [...]
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