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Tag Archives: deflation potential

Major Euro$ Curve Developments (also not clickbait)

I’ve said since it first showed up on December 1 to keep the eurodollar futures curve in the back of your mind. It wasn’t likely to change all that much in its first stage of minor inversion. The mere fact it had gone upside down at all regardless of where on the curve or by how much was already a huge (and negative) development. Even if it didn’t expand over the interim, the important thing initially was whether or not this small bit of upside down would stick around It did. At some...

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The Historical Monetary Chinese Checklist You Didn’t Know You Needed For Christmas (or the Chinese New Year)

If there is a better, more fitting way to head into the Christmas holiday in the United States than by digging into the finances and monetary flows of the People’s Bank of China, then I just don’t want to know what it is. Contrary to maybe anyone’s rational first impression that this is somehow insane, there’s much we can tell about the state of the world, the whole world and its “dollars”, right from this one key data source. And the timing is equally as festive; holidays...

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Start Long With The (long ago) End of Inflation

With the eurodollar futures curve slightly inverted, the implications of it are somewhat specific to the features of that particular market. And there’s more than enough reason to reasonably suspect this development is more specifically deflationary money than more general economic concerns. What I mean is, those latter have come later (“growth scare”) only long after the world’s real money truly began to dry up.Money then economy.How do we know? For one, sequence of events. And because of...

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Taper Rejection

For the FOMC, there was no alternative. The CPI’s keep going higher while the unemployment rate continues lower. Those who are Economists and practice Economics’ brand of econometrics, these would be scary times ahead. Inflationary times unless someone puts a stop to them first. Not because of consumer prices today, but because officials are worried consumers are becoming normalized to these high rates of price acceleration. If the public and businesses all begin to expect these to...

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Omicron Fears Fading, CPI Huge-r Still, Fed Hinting At Accelerated Taper, And Yet Euro$ Inversion (and other things) Is Still Here

The bond market is imploding, right? It has to be going by everything you hear. Did you know that the last two 30-year bond auctions had gone “awry”, as one mainstream news outlet put it? Another “media” shop declared them “catastrophic.”The second of those long bond sales was conducted just yesterday afternoon, right in time to run into the buzzsaw of the November CPI figures released today. According to the BLS, yep, the highest rate of general consumer price increases going...

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Euro$ Futures: There Be Landmines

This wasn’t meant to be a running tally. In fact, that was my major point in yesterday’s curve inversion missive; the thing inverted, it stayed inverted for a second day but maybe won’t change much for some time moving forward. Boring and consistent, what matters most in this first stage is only that the inversion sticks rather than expecting big changes in it.We’ll come back to it if or when something changes worth notice. Throw that out the window for Day 3, however. Somewhat surprising...

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Did Last Week Deliver Some Sour Certainty?

This sour/soar stuff goes back many years. The last time we went through the same hysteria (if for different reasons), everyone said the global economy was going to accelerate, take off, and sail onward forever after. The world was, they all claimed, set to soar.Globally synchronized growth. The bond market didn’t just disagree, it did so vehemently, a pessimism when 2018 began which only gained (and spread) as the year went further on. The more Jay Powell and those who followed him were...

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Sorry Jay, Curve(s) #continuity Is Not A Good Thing

Where is the “tantrum?” If there is one, to this point it has been historically minor changes limited to the shorter end of the yield curve between the 2-year and 5-year USTs. This section of it is more influenced by what the market believes Jay Powell’s Fed will do especially now that it likely will be Jay Powell’s Fed for another (dismal) four years. That’s not tantrum territory, however. What is supposed to be is the long end where growth and inflation expectations trade more...

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Retracing The Yield Gap For The Unemployment Rate Isn’t The Same Thing

Thomas Barkin is President and CEO of the Federal Reserve’s Fifth District branch headquartered in Richmond. Beginning the job during the tumultuous and confusing 2018 (for those wherever at the Fed), Barkin in 2021 is and has been a voting FOMC member. Whether he is judged a “hawk”, “dove”, or some other kind of feathering maniac I’d leave to the mainstream’s infatuation with Greenspan and Volcker legends. It isn’t actually important.On the contrary, the flattening yield curve particularly...

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Since There Is No Tantrum, Can We Taper The Dots Instead?

So much easier to just change the target, to move the goalposts. Having failed for weeks to provoke any “tantrum” to the Federal Reserve’s oncoming taper, even before today’s FOMC meeting all attention was instead simply shuffled off tapering QE and onto rate hikes. Bring the dots back! Anything to keep up the idea the Fed is a central bank in control of money stuff.A single dot maybe two get moved and we’re told to consider this terrific optimism and terrible hawkishness (if you are...

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