Wednesday , May 25 2022
Home / Tag Archives: 3-month libor

Tag Archives: 3-month libor

This Is A Big One (no, it’s not clickbait)

Stop me if you’ve heard this before: dollar up for reasons no one can explain; yield curve flattening dramatically resisting the BOND ROUT!!! everyone has said is inevitable; a very hawkish Fed increasingly certain about inflation risks; then, the eurodollar curve inverts which blasts Jay Powell’s dreamland in favor of the proper interpretation, deflation, of those first two. Twenty-eighteen, right? Yes. And also today.Quirky and kinky, it doesn’t seem like a lot, at least not at first....

Read More »

How Does Reflation Look From The Point of View of the One Market That Gets It

Eurodollar futures are derivative, cash-settled contracts linked to 3-month LIBOR (forget about SOFR and the official hatred of this offshore dollar rate regime). Though that rate acts independently especially at the worst times (thus, the hate), it is heavily influenced by the front-end monetary alternatives set by the Federal Reserve’s monetary policy (IOER, RRP). Because of this, LIBOR kind of seems like it should reflect whatever the Federal Reserve wants; and domestic central bankers...

Read More »

Banks Or (euro)Dollars? That Is The (only) Question

It used to be that at each quarter’s end the repo rate would rise often quite far. You may recall the end of 2018, following a wave of global liquidations and curve collapsing when the GC rate (UST) skyrocketed to 5.149%, nearly 300 bps above the RRP “floor.” Chalked up to nothing more than 2a7 or “too many” Treasuries, it was to be ignored as the Fed at that point was still forecasting inflation and rate hikes. Total financial resilience otherwise. Yesterday was, of course, another...

Read More »

Not Good: Eurodollar Futures Curve Sells Off, At The FRONT

If the Fed has promised to print an unlimited supply of money, then why are inflation expectations at crisis lows and falling? At the same time, there are still-growing signs of illiquidity and an interbank crackup. Bazooka after bazooka, yet they don’t seem to be having much effect. That’s true domestically but more so offshore. You may have seen references to something called the OIS-FRA spread recently as it has gone vertical and refuses to normalize no matter what Jay Powell announces....

Read More »