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The Fed Inadvertently Adds To Our Ironclad Collateral Case Which Does Seem To Have Already Included A ‘Collateral Day’ (or days)

By |2022-03-18T18:56:00-04:00March 18th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The Federal Reserve didn’t just raise the range for its federal funds target by 25 bps, upper and lower bounds, it also added the same to its twin policy tools which the “central bank” says are crucial to maintaining order in money markets thereby keeping federal funds inside the band where it is supposed to be. The FOMC voted to [...]

There Is An Absolutely Solid Collateral Case For What’s Driving Curve Inversion(s) [Part 2]

By |2022-03-16T12:59:00-04:00March 16th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Securities lending as standard practice is incredibly complicated, and for many the process can be counterintuitive. With numerous different players contributing various pieces across a wide array of financial possibilities, not to mention the whole expanse of global geography, collateral for collateral swaps have gone largely unnoticed by even mainstream Economics and central banking.This despite the fact, yes, fact, securities [...]

Last Year Wasn’t The Year of Inflation, It Consistently Set Up This Year For Inflationary Fail

By |2022-03-01T18:43:27-05:00March 1st, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

A Key Bill Reminder For An Otherwise Nondescript Friday

By |2022-01-28T19:29:03-05:00January 28th, 2022|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

With the first Federal Reserve rate hike widely anticipated (all but confirmed) for the March 15-16 FOMC meeting, this means that every one of the bill tenors with the exception of the 4-week are now inside that window. The 8-week maturity moved into it last week, on January 20, so its equivalent yield is now pricing higher alternative money rates [...]

Playing Dominoes

By |2021-12-14T20:13:53-05:00December 14th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

That was fast. Just yesterday I said watch out for when the oil curve flips from backwardation to contango. When it does, that’s not a good sign. Generally speaking, it means something has changed with regard to future expectations, at least one of demand, supply, or also money/liquidity. Contango is a projected imbalance which leaves the global system facing realistic [...]

What’s The Debt Ceiling Got To Do With It (deflation)?

By |2021-12-06T19:48:50-05:00December 6th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I’m not saying it is the whole story, but it’s not just random coincidence, either. It can’t be. At each inflection point when the global eurodollar system rolls over from reflation to the next major funding squeeze, you will find the debt ceiling nonsense rolled on into that process. Every time. On September 8, 2017, the debt ceiling was temporarily [...]

Bill Issuance Has Absolutely Surged, So Why *Haven’t* Yields, Reflation, And Other Good Things?

By |2021-11-01T19:44:36-04:00November 1st, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Treasury Secretary Janet Yellen hasn’t just been busy hawking cash management bills, her department has also been filling back up with the usual stuff, too. Regular T-bills. Going back to October 14, at the same time the CMB’s have been revived, so, too, have the 4-week and 13-week (3-month). Not the 8-week, though.Of the first, it’s been a real tsunami [...]

Short Run TIPS, LT Flat, Basically Awful Real(ity)

By |2021-10-27T20:33:22-04:00October 27th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Over the past week and a half, Treasury has rolled out the CMB’s (cash management bills; like Treasury bills, special issues not otherwise part of the regular debt rotation) one after another: $60 billion 40-day on the 19th; $60 billion 27-day on the 20th; and $40 billion 48-day just yesterday. Treasury also snuck $60 billion of 39-day CMB’s into the [...]

The Curve Is Missing Something Big

By |2021-10-19T18:34:46-04:00October 19th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

Bills Flipping The Debt Ceiling

By |2021-09-14T19:46:54-04:00September 14th, 2021|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The dollar stopped falling on January 6, beginning a reversal which has lasted more than eight months. This forewarning was joined two days later when TIPS breakevens crossed, inverting the 5-year when compared to the 10-year. About a week after that, T-bills.In other words, as I had written up last week, there actually were quite a few contrary indications in [...]

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