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Tag Archives: collateral

Dollar Now Leads, Rest Of The Market Pack Now Follows

The US$ continues on its rampage, particularly zeroed in on China for simple if misunderstood reasons (that have nothing to do with “devaluation”). What about the rest of the marketplace, the other stuff which identifies the eurodollar’s various cycles? You know about T-bills, which, yet again today, are more like what the dollar is suggesting. Other than those, what’s the yield curve, eurodollar futures, swaps, even the forward Treasury spread up to?In March – seasonal low point – these...

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All The Dead Horses, And All Powell’s Men, Can’t Make Sense of Europe – Again

As a preface to this update ostensibly on Europe, it’s all really about Euro$ #5 sadly rounding into form. In this first part, I’m going to have resurrect the quotation marks surrounding the term “rate hikes”, or bring back RHINO (rate hikes in name only) given what’s going on in Treasury bills.Not rate hikes, or enough of them. Our dead horse needs more clubbing. Where's that dead equine? I'm going to beat on it some more.Tbills today: 4w @ 49bps, 31 less than RRP8w @ 71bps, 9...

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Collateral Shortage…From *A* Fed Perspective

It’s never just one thing or another. Take, for example, collateral scarcity. By itself, it’s already a problem but it may not be enough to bring the whole system to reverse. A good illustration would be 2017. Throughout that whole year, T-bill rates (4-week, in particular) kept indicating this very shortfall, especially the repeated instances when equivalent bill yields would go below the RRP “floor” and often stay there for prolonged periods.There was, as I wrote at the time, no mistaking...

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What Really ‘Raises’ The Rising ‘Dollar’

It’s one of those things which everyone just accepts because everyone says it must be true. If the US$ is rising, what else other than the Federal Reserve. In particular, the Fed has to be raising rates in relation to other central banks; interest rate differentials. A relatively more “hawkish” US policy therefore the wind in the sails of a “strong” dollar exchange regime.How else would we explain, for example, the euro’s absolute plunge since around May last year? Everything since would...

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Re-Inversion + CNY

For the third month in a row, China’s PBOC refrained from guiding its quasi-credit benchmark lower. This seemed out of line with what Premier Li Keqiang, in particular, had stated last week before authorities did drop the RRR rate on Friday. Saying that China would “step up” support for its faltering economy, however the RRR cut was half of what had been expected.Now the central bank does nothing to the LPR.Authorities had cut the country’s 1-year Loan Prime Rate (LPR) once in December and...

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The (less) Dollars Behind Xi’s Shanghai of Shanghai

What everyone is saying, because it’s convenient, is that China’s zero-COVID policies are going to harm the economy. No. Economic harm of the past is the reason for the zero-COVID policies. As I showed yesterday, the cracking down didn’t just show up around 2020, begun right out in the open years beforehand, born from the scattering ashes of globally synchronized growth. Xi Jinping saw how a very different post-2008 global economy without any recovery was going to keep China from living all...

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Yield Curve Inversion Was/Is Absolutely All About Collateral

If there was a compelling collateral case for bending the Treasury yield curve toward inversion beginning last October, what follows is the update for the twist itself. As collateral scarcity became shortage then a pretty substantial run, that was the very moment yield curve flattening became inverted.Just like October, you can actually see it all unfold.According to the latest FRBNY data taken from Primary Dealers, repo fails during the week of April 6 (most recent figures) were a whopping...

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*Every* Time, Debt Ceiling Impacts Collateral Producing Inevitable Deflationary Currency

Last September 28, Treasury Secretary Janet Yellen wrote to Nancy Pelosi of the House of Representatives to inform its Speaker that the government would run out of cash, and accounting tricks, by October 18. Unless Congress, starting in the House, did something about the so-called debt ceiling, Treasury would be forced to take even more restrictive, potentially destructive means to stay legal.Yellen had already been scaling back T-bill issuance as one of those tricks, no different than any...

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The Dead Horse Bill Rides In On

I know this gets to be like beating a dead horse. It’s a topic I keep going back to over and over again because, frankly, it absolutely deserves the constant focus. For one thing, you’ll never, ever hear this out of any so-called monetary official despite the fact that history has repeatedly and conclusively established collateral is itself currency and more often than not the scarcity of it the primary pathology of deflationary currency. In the most recent case of last week’s rate hike,...

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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)

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 increase IOER from 15 bps to 40 bps, and the RRP from 5 bps to 30 bps.That RRP, or reverse repo program, is meant to be something of a soft floor, when for its...

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