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Tag Archives: Interest rates

Weekly Market Pulse: Nothing To See Here. No, Really. Nothing.

The answer to the question, “What should I do to my portfolio today (this week, this month)? is almost always nothing. Humans, and especially portfolio managers, have a hard time believing that doing nothing is the right response….to anything…or nothing. We are programmed to believe that success comes from doing things, not not doing things. And so, often we look at markets on a day-to-day or week-to-week basis and think something of significance happened and we ought to...

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Rechecking On Bill And His Newfound Followers

The benchmark 10-year US Treasury has obtained some bids. Not long ago the certain harbinger of bond rout doom, the long end maybe has joined the rest of the world in its global pause if somewhat later than it had begun elsewhere (including, importantly, its own TIPS real yield backyard). Even nearer-in inflation expectations have rounded off at their current top. Perhaps no more than a short-term rest before each rising again, then again with the rest of the world’s markets acting...

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Maybe The Biggest Challenge Is Not To Get Carried Away

Like a child fixated on a shiny new toy, I was enthralled by trading in WTI futures on Monday. There are times when end-of-day closing prices just don’t capture the full extent of what actually goes on during the several hours of any regular session, and yesterday was certainly one of those times. We’ve been on top of front-end contango for some weeks now. At first wondering if merely an artifact of growing technical illiquidity as the lead contract lurches toward its expiration, then the...

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Throw A German ‘Log’ On The Possible Fedwire Fire

One other fascinating, corroborating angle to the short run picture comes at us from Europe, specifically Germany. As illustrated yesterday, there’s a whole bunch of market prices/indications from around the world which have keyed in on February 24-25 as a possible turning point. The most obvious candidate which may have triggered it would be February 25th’s major US Treasury selloff. But if that was the case, why would there have been a split from Germany’s bunds (schatzes, too)? These...

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Was Last Month’s Fedwire A Coincidence?

Federal Reserve Chairman Jay Powell rarely gives media interviews. Most of his interaction with journalists takes place in the carefully controlled – and credentialed – environment of post-meeting press conferences. One notable exception was last May when the Fed’s head guy visiting with 60 Minutes so that he could, pardon the expression, lie his ass off. Today, March 25, 2021, Powell went back into the interview setting this time on the radio with NPR’s Steve Inskeep. Like Scott Pelley had...

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Kiwi Busted QE And Its Relation To The Reflation Story

In theory, it goes like this: QE or any sort of large-scale asset purchase (LSAP) undertaken by a central bank is needed during times of trouble in order to reduce interest rates in general. Buying bonds seems like it would lower yields, and lower yields mean more accommodative credit, therefore a boost to the real economy.So simple, straightforward, and intuitive, who could possibly argue otherwise?And the theory has been studied (to death). Ever since the Bank of Japan pioneered this...

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Divergence: The Only Macro

The major central banks have met.  The general message is that continued strong monetary support remains necessary, and the coming increase in price pressures is likely to be technical and transitory.  The US fiscal stimulus, on the back of which the OECD revised its global growth forecast up 1.4 percentage points to  5.6%, has been approved.  The ECB's latest targeted three-year loan operation (TLTRO) saw demand for 330.5 bln euros, the most since last June, at a rate as low as 100...

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Weekly Market Pulse: The More Things Change, The More The Song Remains The Same

Markets continue to move based on the expectation of a post-virus boom. At least that is the dominant narrative right now. The economy, boosted by another round of stimulus, will surge once the virus is under control and things return to normal. President Biden last week offered his version of optimism by saying that families would be able to gather for a July 4th celebration, but only in small groups for backyard barbecues. I’m guessing that the President doesn’t get out on his...

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What Gold Says About UST Auctions

The “too many” Treasury argument which ignited early in 2018 never made a whole lot of sense. It first showed up, believe it or not, in 2016. The idea in both cases was fiscal debt; Uncle Sam’s deficit monster displayed a voracious appetite never in danger of slowing down even though – Economists and central bankers claimed – it would’ve been wise to heed looming inflationary pressures to cut back first. Combined, fiscal and monetary policy was, they said, eventually going to let loose on...

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Weekly Market Pulse: How High Can Rates Go?

I’ve been getting that question a lot these days. How high can rates go? It is asked in a way that seems to imply that the answer is obvious – not much. Why? The answer is almost always the same; the Fed can’t and won’t let rates go up. If they did, it would kill the economy and raise the interest cost of the government. They can’t let that happen so they’ll implement yield curve control and keep long-term rates from rising. The Fed is believed so powerful...

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