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Tag Archives: nominal yields

Too Much (about) Taper, Not (yet) Too Many Treasuries

Almost universally, the comeback is always QE. Whenever trying to discuss the bond market’s unmovable pessimism in 2021, especially now about six months after reflation ended, people just don’t want to hear about such low (and lower) growth and inflation expectations in nominal yields. No, that’s not deflationary potential, they’d say, it was and is the Fed buying bonds which has kept a lid on rates.If not for Jay Powell and his penchant for “monetizing” his buddy Yellen’s offerings, then,...

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Golden Collateral Checking

Searching for clues or even small collateral indications, you can’t leave out the gold market. We’ve been on the lookout for scarcity primarily via the T-bill market, and that’s a good place to start, yet looking back to last March the relationship between bills and bullion was uniquely strong. It’s therefore a persuasive pattern if or when it turns up again. To recap the main push of last year’s acute dollar shortage: Over the past several dreadful weeks of liquidations the pattern has...

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Soar or Sour: Short Run, *Then* What?

The sound of economic sizzle finally within earshot, though perhaps nearly a year too late. PMI’s for the month of March 2021 were of the sort which should have come about in May and June 2020. The “V”-shaped recovery was much talked about at that earlier time, though in PMI terms (as well as regular “hard” data) the numbers fell way, way short of it. I and others had pointed out repeatedly that to be consistent with an actual recovery, given the depths from where the recession began, the...

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Already Tried: イールドカーブコントロール

The Aussies weren’t the first to drive into the YCC channel. That “honor” belonged instead where it always does: Japan. The Japanese had also pioneered yield curve control just like they had for practically every single element behind post-crisis monetary policy everywhere else around the world. It’s always a safe bet that if some central bank somewhere starts doing something it has already been tried – and failed – at the Bank of Japan.YCC, or yield caps as practiced by the RBA in...

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Messing Gold

They really got carried away, though in the context of that time there seemed any number of legitimate reasons for this. Gold investors were bidding up the precious metal like there was some kind of shortage, the price in dollars making a new record high (LBMA morning fix) on August 7. The way it was reported in the mainstream, this was more confirmation of Jay Powell’s flood of money printing making its way into every last corner of the financial world driving gold bugs nuts in the process...

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Inflation Hysteria #2 (Nominal UST)

What had given Inflation Hysteria #1 its real punch had been the benchmark 10-year Treasury note. Throughout 2017, despite the unemployment rate in the US, globally synchronized growth being declared around the world (and being declared as some momentously significant development), and whatever other tiny factors acceding to the narrative, longer-term Treasury rates just weren’t buying it. Instead, the eurodollar monetary system continued to cling to these safest, most liquid instruments...

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Bursting A Few Bubbles; No, Not That One

The Presidential election was supposed to have been a big one. Yields were low, or high, based on how whichever expert or financial media article was interpreting the manner of trading in bond markets. You could take your pick; a “blue wave” was bad, as in BOND ROUT!!! due to inflation and potential for even more (how?) spendthrift ways in government. A tossup election was both good and bad, opinions split on the ramifications.Either way, nearly everyone said November 3rd was pretty much...

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Vaccine-phoria

What’s interesting about vaccine-phoria is that it’s largely been contained to just the one part of the bond market. Nominal Treasury yields at the long end have surged, while those at the shorter end have moved up a bit, too. Predictably, the calls for the BOND ROUT!!!! have grown, typically referencing the guaranteed end of the so-called 40-year bond “bull.” If the 10-year rate gets over 1%, they say, that breaks some pattern on some chart that means something to someone somewhere. Stop...

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‘Something’ Sure Seems Off

It seemed like an odd, counterintuitive market reaction to what was total chaos. First the news of Lehman Brothers followed closely by AIG, panic gripped every corner of the global marketplace. Toward late September 2008, the stock market would meltdown (the main part of GFC1 that most people associate with the term) in a wave of liquidations due to a global dollar shortage that would last through October 10 in its most acute stage.During that time, though, bond rates at the long end of the...

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The Midpoint

The idea of a midpoint can be misleading in that we might immediately think of one in terms of time. The middle being exactly in the middle, halfway from the beginning while also halfway to the end. A midpoint need not be so pedant. In looser usage, it can instead denote merely the separation in between two otherwise irregularly spaced trends. Trade wars and QE’s, not-QE’s and confidence. For the longest time during 2019, the global bond market had prevented the itchy desires of many in...

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