wholesale funding

The Remarkable And Lengthy Consistency of Repo

By |2018-06-25T18:11:32+00:00June 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before August 2007, US$ money markets operated efficiently and predictably. They behaved according to a rigid hierarchy, which is a good thing no matter how it may sound. This inflexibility in the context of funding markets was exactly what we would want. Arbitrage opportunity was responsible for enforcing the rules. One simple example was the [...]

Bank Reserves Appendix; One Additional Case Study

By |2018-05-11T16:48:29+00:00May 11th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Early last month, Deutsche Bank replaced one CEO pledged to paring back the bank’s ailing franchise with another committed to doing the same thing only more quickly. As I wrote at the time, “Cryan isn’t being ousted because he was wrong, but because he was right.” In comes Christian Sewing whose plans are starting to [...]

Bank Reserves Part 2; If QE Was Really QT, Then Why Hasn’t QT Been QE?

By |2018-05-09T17:35:19+00:00May 8th, 2018|Economy, Federal Reserve/Monetary Policy, Markets|

Since we’ve already cracked open the accounting, it makes some sense to take our example into an important corollary examination (if you haven’t yet, you’ll need to read through Part 1). In our prior examples, we’ve assumed that the swap of risk-free assets on Bank A’s asset side is a neutral trade. That is, there [...]

Bank Reserves Part 1; The Great Tease

By |2018-05-09T17:35:48+00:00May 8th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I completely understand the confusion regarding bank reserves. I really do. It’s easy to believe they are money because that’s what you’ve been taught from Day 1. Not only that, the same message is carelessly reinforced in the media every single time QE or any LSAP is referenced. Bank reserves are the aftermath of money [...]

Three Years Ago QE, Last Year It Was China, Now It’s Taxes

By |2017-12-04T18:57:43+00:00December 4th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

China’s National Bureau of Statistics reported last week that the official manufacturing PMI for that country rose from 51.6 in October to 51.8 in November. Since “analysts” were expecting 51.4 (Reuters poll of Economists) it was taken as a positive sign. The same was largely true for the official non-manufacturing PMI, rising like its counterpart [...]

Just When You’ve Thought You’ve Seen It All

By |2017-12-04T17:18:07+00:00December 4th, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

I could understand it if its track record was spotty, or partially mixed. But the level of denial runs deep and wide with the yield curve. There is a growing chorus of nonsense, really, which is attempting to spin the flattening as some kind of benign technical rotation that through illogical convolution equals the opposite [...]

Eurodollar Futures, The Verdict (Eurodollar University)

By |2017-08-22T16:34:53+00:00August 22nd, 2017|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The American banking system had been primarily a domestic one throughout its early development. Despite, or because of, the rapid growth in the later 19th century, banking was orientated almost entirely inward to finance the needs of that growth. But as a growing national as well as industrial power, the US adopted several measures early [...]

‘Dollar’ ‘Improvement’

By |2017-04-24T19:44:18+00:00April 24th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

According to the headline TIC statistics, foreign central banks have in the past six months sold the fewest UST’s since the 6-month period ended November 2015. That may indicate an easing of “dollar” pressure in the private markets due to “reflation” sentiment. They are, however, still selling. In February 2017, the latest month available, the [...]

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