Thursday , November 14 2019
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Tag Archives: bonds

Risk Appetites Satiated Ahead of the Weekend

Overview: The capital markets are consolidating the recent moves ahead of the weekend. Equities are paring this week's gains, though the Nikkei, which was closed on Monday, extended its advance for the fourth consecutive session. Despite the profit-taking today, the MSCI Asia Pacific Index rose for the fifth week. Europe's Dow Jones Stoxx 600 is snapping a five-day rally, but it is closing in on the fifth consecutive weekly advance. US shares are trading softer. It is up a modest 0.6%...

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Mauldin: Modern Central Banking Is More Vulnerable Than We Think

Banks are a place where you store your cash, right? Not exactly. When you deposit money in a checking or savings account, you aren’t just letting the bank hold it on your behalf. You are lending the bank that money and the bank is borrowing it. That’s why deposits show as a liability on the bank’s balance sheet. We think of banks as lenders, and they are, but they’re also borrowers. They make money by lending at higher rates than they pay as borrowers, and by leveraging their deposits via...

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10-Reasons Why Productivity Is Declining

Economists debate whether the decline in productivity is real. It is real. let’s investigate 10 reasons why. Productivity Measurement Brookings questions the Productivity Slump. It cites measurement issues. Much of the recent debate, and related research, on productivity measurement issues has focused on this decline in productivity in the U.S. Predating the financial crisis and the ensuing Great Recession, and now continuing for more than a decade, the productivity slowdown in the...

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Red Flags All Over It-Wasn’t-Worse Payroll Friday

Better-than-expected is the new strong. Even I’m amazed at the satisfaction being taken with October’s payroll numbers. While you never focus too much on one monthly estimate, this time it might be time to do so. But not for those other reasons. Sure, GM caused some disruption and the Census is winding down, both putting everyone on edge. The whisper numbers were low double digits, maybe even a negative headline estiamte. Markets had been riding pure pessimism beforehand, with inverted curves...

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Three (Rate Cuts) And GDP, Where (How) Does It End?

The Federal Reserve has indicated that it will now pause – for a second time, supposedly. Remember the first: after raising its benchmark rates apparatus in December while still talking about an inflationary growth acceleration requiring even more hikes throughout 2019, in a matter of weeks that was transformed into a temporary suspension of them. Expecting the easy disappearance of “transitory” factors, that Fed pause was to be followed by the second half rebound and eventual if careful...

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Monthly Macro Monitor: Market Indicators Review

Is the recession scare over? Can we all come out from under our desks now? The market based economic indicators I follow have improved since my last update two months ago. The 10-year Treasury rate has moved 40 basis points off its low. Real interest rates have moved up as well but not quite as much. The difference is reflected in slightly higher inflation expectations. The yield curve has also steepened as the 10-year Treasury yield rose faster than the 2-year. This is not the type of...

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There’s No S-L-R in R-E-P-O

JP Morgan’s CEO Jamie Dimon has been running around Washington claiming that mid-September’s repo rumble was the result of the post-crisis regulatory environment. He now says that his bank had the spare cash and was willing to cash in on double digit repo rates but it was government rules which prevented that from happening. It’s unclear (but we can, and I will, guess) why he didn’t make the same claim and warn everyone on Friday, September 13, before the seasonal low point in liquidity that...

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The Midpoint

The idea of a midpoint can be misleading in that we might immediately think of one in terms of time. The middle being exactly in the middle, halfway from the beginning while also halfway to the end. A midpoint need not be so pedant. In looser usage, it can instead denote merely the separation in between two otherwise irregularly spaced trends. Trade wars and QE’s, not-QE’s and confidence. For the longest time during 2019, the global bond market had prevented the itchy desires of many in...

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Margin Debt Is Declining. Are The Bulls In The Clear?

In a recent weekly newsletter (Subscribe for free e-delivery), I discussed the rather dramatic decline of short-interest in the S&P 500 which suggests a high degree of complacency by investors. As Wolf Richter recently noted: “Of the total shares outstanding of the SPDR S&P 500 ETF, only 2.6% were out on loan to short-sellers this week, the lowest since early October 2018, and down from 7% during the summer, according to IHS Markit data cited by Bloomberg. Meaning that short-sellers...

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The Spread of Collateral, Credit, and Spreads

When we talk about money dealers (not just primary dealers) and liquidity, we aren’t just zeroing in on the repo market. Money market conditions such as what we can observe in the part of the global repo market that ends up hitting the tape can be helpful in assessing overall liquidity. It isn’t, however, the complete picture. If money dealers are shy in repo, where else might they be reluctant to willingly add their resources (balance sheet capacities)? Whether we fully appreciate it or not,...

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