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Tag Archives: eurodollar futures

Sure, One and Done

The FOMC yesterday reiterated their stance that the economy was strong. But they also hedged. A one-and-done rate cut is one thing, some insurance (allegedly) for keeping the good times rolling. What about QT, though? That’s the funny thing that you can’t help but get stuck on. Not bank reserves, mind you, they’re worthless (perhaps literally). Rather, Federal Reserve officials appear to be experiencing that sinking feeling, too. QT was supposed to continue unabated until the level of...

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The Speed of Sour: LIBOR Now Inverted, Too

Last week, for the first time since February 2008, the LIBOR curve inverted. The 3-month tenor has been on the move downward for some time. The 1-month rate has been gentler in its slope. Last Thursday, the two finally crossed. As unnatural as inversion in the UST curve or elsewhere, it’s another sign of imminent rate cuts. I am somewhat reluctant to point out how it was on August 9, 2007, when this same thing happened for the first time last time around. It doesn’t mean we are repeating...

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Behind The Blame Game, A Nastier #4

After what is all but certain to be the final “rate hike” in this cycle, Bloomberg reported that President Trump had previously explored all possible legal ramifications of demoting Federal Reserve Chairman Jay Powell. The issue has become a major one, in the media, anyway, now that Mr. Powell has indicated his error. There will be no further hikes this year, rate cuts now pretty much a done deal from here. Given the situation, it’s at least understandable how no one is in much of a...

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Curve Sanity (Updated)

UPDATED for imminent rate cuts and latest FOMC statement (June 19) Rate cuts will be insurance against whatever “trade wars” will throw at the global economy. That’s the current line from monetary officials in the US, anyway. The real question to ask is, how would they know? Starting with trade wars. Is that really what’s behind all this? The evolution of the curves told you everything you need to know, and tell you what to prepare for. It’s not just inversion that is noteworthy. They said...

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TIC Reveals The Landmine; This Time Is Already Different

I’ve been writing since October when China reopened from that month’s Golden Week holiday that big dollar problems were imminent. You needn’t have taken my word for it, the PBOC said as much. Not directly, of course, but in interpreting the central bank’s anticipated behavior left little doubt.  Over the next few months, more and more it seemed as if the entire global economy struck a landmine; the not-decoupled US economy stuck right in the thick of it, too. Recession indications spread...

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Curve Sanity (Not What Most People Want To Hear or See)

Rate cuts will be insurance against whatever “trade wars” will throw at the global economy. That’s the current line from monetary officials in the US, anyway. The real question to ask is, how would they know? Starting with trade wars. Is that really what’s behind all this? The evolution of the curves told you everything you need to know, and tell you what to prepare for. It’s not just inversion that is noteworthy. They said all along there was no boom, even during the most maniacal parts of...

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Curve-sanity

There are those which are so very clear in their disingenuousness – to the point of overdoing it and becoming obviously absurd. In the increasingly desperate rush to downplay the headlong race to rate cuts, this one’s up there: Eurodollar futures traders, having decided that the Federal Reserve is likely to cut the fed funds target range at least twice over the next six months, are looking beyond the expected easing cycle in search of their next edge — the point at which rates will...

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Payrolls: Rate Cuts Not Of Their Choice

It’s never just one payroll report. The month-to-month changes in the Establishment Survey barely qualify as statistically significant, let alone meaningful. What that means is one good monthly headline is nothing to get excited about, just as one bad month shouldn’t get anyone too worked up. May 2019’s jobs report, however, isn’t in isolation. The headline for the Establishment Survey was +75k, well below expectations. On top of that, last month’s blowout (or what passes for one these days)...

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What Kind Of Risks/Mess Are We Looking At?

The fact that the mainstream isn’t taking this all very seriously isn’t anything new. But how serious are things really? That’s pretty much the only question anyone should be asking. What are the curves telling us about what’s now just over the horizon? I hesitate to use 2008 comparisons too often because many people immediately jump to extrapolations, especially in these more esoteric market indications. If you say something is like 2007 or 2008, people think you are saying we are on the...

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RIP: BOND ROUT!!!!

Reality has begun to dawn across Wall Street’s Economists. This year isn’t going to go the way everyone thought. Even as late as last November and December, the optimism was still sharp about how what was taking place at that moment would be nothing more than a transitory soft patch. They still listened to Jay Powell. In its projections for this year, 2019, JP Morgan’s strategists were not truly dissuaded. Given a Fed that continues to tighten against the backdrop of increasing Treasury...

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