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Tag Archives: EuroDollar

Benign Neglect Check

The key has always been the first part of the word rather than the more common focus on the second. A eurodollar is more about the “euro” than the more obvious monetary denomination. Since it began decades before Europe created its common currency, the eurodollar has nothing whatsoever to do with the euro. But those four letters mean absolutely everything. The whole world’s fate remains tied to them. In its earliest days, it was simply called the Continental dollar. For various and perhaps...

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The Scientism of Trade Wars

One year ago, last October, the IMF published the update to its World Economic Outlook (WEO) for 2018. Like many, the organization began to talk more about trade wars and protectionism. It had become a topic of conversation more than concern. Couched as only downside risks, the IMF still didn’t think the fuss would amount to all that much. Especially not with world’s economy roaring under globally synchronized growth. Even though there were warning signs already by then, the idea was that the...

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The Big Picture Doesn’t Include ‘Trade Wars’

The WTO today downgraded its estimates for global trade growth. In April, the international organization had figured the total volume of world merchandise trade would expand by about 2.6% in all of 2019 once the year closed out on the anticipated second half rebound. Everyone took their lumps in H1 and the WTO like central bankers everywhere were thinking “transitory” factors. Last September, the same outfit was still forecasting trade growth would nearly reach 4% in 2019 as first believed...

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The Wholesale Zoo: Where Did All The Animals Go?

One of the most maddening aspects of the recent repo market, federal funds mashup is the lack of context behind it. The event is being characterized and described as if in isolation. Regulations are squeezing dealers at the same time there is a lack of bank reserves. Thanks to QT, there’s just not enough liquidity to go around. Therefore, the Fed adds a repo facility of some type and, voila, back to our regularly scheduled programming. It all sounds very comforting. The focus on bank reserves...

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China Nastier Number Four

Officials in China seem to be taking a page out of Mario Draghi’s playbook. Before Europe was pushed to the bring of recession, the President of Europe’s central bank would downplay any weakness in the European economy. In 2018 especially, Draghi frequently referred to 2017 as if it was something special. No cause for concern, he reassured, any softening was just the Continent slowing down from really awesome growth. With the ECB restarting QE last month, he hasn’t used that reference in some...

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Where The Global Squeeze Is Unmasked

Trade between Asia and Europe has dimmed considerably. We know that from the fact Germany and China are the two countries out of the majors struggling the most right now. As a consequence of the slowing, shipping companies have had to make adjustments to their fleet schedules over and above normal seasonal variances. It was reported last week that Maersk and MPC would “temporarily suspend” their sailings on one of the biggest routes between Europe and Asia. Weakening demand and plummeting...

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The Obligatory Europe QE Review

If Mario Draghi wanted to wow them, this wasn’t it. Maybe he couldn’t, handcuffed already by what seems to have been significant dissent in the ranks. And not just the Germans this time. Widespread dissatisfaction with what is now an idea whose time may have finally arrived. There really isn’t anything to this QE business. But we already knew that. American officials knew it in June 2003 when the FOMC got together to savage the Bank of Japan for their lack of results. It was decided then that...

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Dollar (In) Demand

The last time was bad, no getting around it. From the end of 2014 until the first months of 2016, the Chinese economy was in a perilous state. Dramatic weakness had emerged which had seemed impossible to reconcile with conventions about the country. Committed to growth over everything, and I mean everything, China was the one country the world thought it could count on for being immune to the widespread economic sickness. That’s why in early 2016 authorities panicked into another huge, and...

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Is The Negativity Overdone?

Give stimulus a chance, that’s the theme being set up for this week. After relentless buying across global bond markets distorting curves, upsetting politicians and the public alike, central bankers have responded en masse. There were more rate cuts around the world in August than there had been at any point since 2009. And there’s more to come. As Bloomberg reported late last week: Over the next 12 months, interest-rate swap markets have priced in around 58 more rate cuts, assuming central...

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China’s Next Warning

Chinese monetary authorities announced today what will be for some of its banks a seventh round of “stimulus.” For the largest institutions, it will “only” be their sixth and the first one since January 2019. The PBOC has decided it is time for more RRR cuts. Effective September 16, the ratio all banks are required to hold of reserves will be reduced by 50 bps; applying to certain city banks, the decrease will be 100 bps. It sounds like a flood of stimulus, enabling China’s...

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