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Tag Archives: bond buying

Rate Hikes and ‘Inflation’ Sizzle, But Where’s QE’s Beef?

As a follow-up to the post-October correlation in Treasuries, it’s worth reiterating how much more compelling the flattening curve has been given the full range of circumstances otherwise all lined up directly opposed to it. There has been: 1. Accelerating CPI.2. Higher oil prices.3. Looming rate hikes.4. Outwardly favorable labor data turbocharging expectations for even more aggressive rate hikes (and QT).5. Taper – meaning the Fed buying fewer USTs of all kinds, putting “too many”...

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Another Attempt At QE/Inflation

You have to hand it to Willian Dudley. Having committed one egregious error after another while in charge of the Fed’s New York-based Open Market Desk during the first Global Financial Crisis, Bill was kicked upstairs anyway to run that entire central bank branch following the debacle. He then continued on in the same spirit and with the same results. https://t.co/H2ezNGS5Qb pic.twitter.com/lsMEUkvqQ2— Jeffrey P. Snider (@JeffSnider_AIP) February 2, 2022 In the middle of last...

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If Not ‘Flow’, Then Has ‘Stock’ ‘Rigged’ The Flattening Curve In QE’s Favor?

Flatter. The yield curve continues to shrink in the important middle calendar spaces where growth and inflation expectations run the place. Treasuries have been doing this since around March, a peculiar (given monolithic mainstream reporting otherwise) eight-month reign of growing pessimism rather than inflationary confidence. Did the market foresee omicron more than half a year ago? No. That’s not really what this has been all about. As noted yesterday, the unnervingly steady flattening...

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Too Much (about) Taper, Not (yet) Too Many Treasuries

Almost universally, the comeback is always QE. Whenever trying to discuss the bond market’s unmovable pessimism in 2021, especially now about six months after reflation ended, people just don’t want to hear about such low (and lower) growth and inflation expectations in nominal yields. No, that’s not deflationary potential, they’d say, it was and is the Fed buying bonds which has kept a lid on rates.If not for Jay Powell and his penchant for “monetizing” his buddy Yellen’s offerings, then,...

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Taper *Without* Tantrum

Whomever actually coined the term “taper”, using it in the context of Federal Reserve QE for the first time, it wasn’t actually Ben Bernanke. On May 22, 2013, the central bank’s Chairman sat in front of Congressman Kevin Brady and used the phrase “step down in our pace of purchases.” No good, at least from the perspective of a media-driven need for a snappy one-word summary. Taper. Then the tantrum.Except, no, it wasn’t sulking rage over the prospects for fewer bond purchases so much as...

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Accusing the Accused of Excusing the Mountain of Evidence

Why not let the accused also sit in the jury box? The answer seems rather obvious. While maybe the truly honest man accused of a crime he did commit would vote for his own conviction, the world seems a bit short on supply of those while long and deep offering up practitioners of pure sophistry in their stead.These others when faced with irrefutable evidence of their guilt opine endlessly, obliquely about how “it’s complicated.”See, though, it’s actually not.We’ve been led to believe that...

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So Long As The Bucket Is Full of Holes, Treasury Demand Comes First

Foreigners are dumping their Treasuries! The Fed is monetizing the debt! The federal government has gone insane! Mass fiscal hysteria!Yet, yields on these things are comfortably within sight of their record lows as prices have never been higher. Supply is very obviously off-the-charts, but so, too, must be demand. Every time we hear about “too many” Treasuries the market yet again proves it nothing more than fallacy, a myth that just won’t die.The demand comes first. That’s the thing. So...

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Yield Caps = Toddlers

The Federal Reserve has cut its QE purchasing pace, and yet the US Treasury Department doesn’t seem hampered by a shortage of bidders for its record-setting note auctions. Far from “too many” Treasuries, prices are once more unequivocal how there aren’t enough. With or without Powell, the auction record is clear and, unlike those constantly talking up the BOND ROUT!!! that never happens, honest. Yesterday, it was the 3-year maturity. An astonishing $46 billion was sold, new high, with a...

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Big Trouble In QE Paradise

Maybe it was a sign of things to come, a warning how it wasn’t going to go as planned. Then again, when it comes to something like quantitative easing there really is no plan. Other than to make it sound like there is one, that’s really the whole idea. Not what it really is and what it actually does, to make it appear like there’s substance to it. After experimenting with NIRP for the first time and then adding a bunch of sterilized asset purchases in 2014, Europe’s central bank was getting...

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Central Bankers Follow Bonds, Then Insist They Aren’t And That Bonds Agree With Them

When central bankers use the word “financial” in an economic context, they mean exclusively stocks. Maybe that’s somewhat appropriate given how bonds are so often treated as monetary equivalents. Then again, if that is the case in the official view, how does anyone reconcile bonds with anything? Economy or money? The hard answer is that officials don’t really care about yields. They “decompose” them into what they think are discrete components and then analyze the yield sausage as needed....

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