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Tag Archives: QE

Collateral Shortage…From *A* Fed Perspective

It’s never just one thing or another. Take, for example, collateral scarcity. By itself, it’s already a problem but it may not be enough to bring the whole system to reverse. A good illustration would be 2017. Throughout that whole year, T-bill rates (4-week, in particular) kept indicating this very shortfall, especially the repeated instances when equivalent bill yields would go below the RRP “floor” and often stay there for prolonged periods.There was, as I wrote at the time, no mistaking...

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Do I Owe Christine Lagarde An Apology?

I may have to rethink my opinion of Christine Lagarde. It just may be that after helming one serious debacle after another, she – unlike most in her position – may have learned a thing or two about being too quick to call it a day. Premature celebrations were the hallmark of central banks throughout the last fifteen years, including, famously, her predecessor’s predecessor raising ECB rates…in June 2008.Lagarde was, after all, the leader at the IMF behind its biggest disaster in history...

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I Told You It *Wasn’t* Money Printing; How The Fed Helped Cause, But Can’t Solve, Our Current ‘Inflation’

Trust the Fed. Ha! It’s one thing for money dealers to look upon Jay Powell’s stash of bank reserves with remarkable disdain, more immediately damning when effects of the same liquidity premiums in the real economy create serious frictions leaving the entire world exposed to the consequences. When all is said and done, the Federal Reserve has created its own doom-loop from which it won’t likely escape. The 2022 FOMC has made itself plain, incredibly hawkish to an extent not seen since 2006,...

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Goldilocks And The Three Central Banks

This isn’t going to be like the tale of Goldilocks, at least not how it’s usually told. There are three central banks, sure, call them bears if you wish, each pursuing a different set of fuzzy policies. One is clearly hot, the other quite cold, the final almost certainly won’t be “just right.” Rather, this one in the middle simply finds itself…in the middle of the other two.Running red-hot to the point of near-horror, that’s “our” Federal Reserve. The FOMC minutes from last month’s rate...

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The Rate Hikers Are Not Serious People

Though I say, write, and communicate all the time how the Federal Reserve is not a central bank because it doesn’t do money and that therefore its non-money monetary policies are little more than pop psychology conveyed via an increasingly stale puppet show, you might be surprised to learn that none other than Janet Yellen has publicly agreed with my summation. She didn’t use that language, of course, and Ms. Yellen was very careful to instead set her version of the same thing in a more...

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Rate Hikes and ‘Inflation’ Sizzle, But Where’s QE’s Beef?

As a follow-up to the post-October correlation in Treasuries, it’s worth reiterating how much more compelling the flattening curve has been given the full range of circumstances otherwise all lined up directly opposed to it. There has been: 1. Accelerating CPI.2. Higher oil prices.3. Looming rate hikes.4. Outwardly favorable labor data turbocharging expectations for even more aggressive rate hikes (and QT).5. Taper – meaning the Fed buying fewer USTs of all kinds, putting “too many”...

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Another Attempt At QE/Inflation

You have to hand it to Willian Dudley. Having committed one egregious error after another while in charge of the Fed’s New York-based Open Market Desk during the first Global Financial Crisis, Bill was kicked upstairs anyway to run that entire central bank branch following the debacle. He then continued on in the same spirit and with the same results. https://t.co/H2ezNGS5Qb pic.twitter.com/lsMEUkvqQ2— Jeffrey P. Snider (@JeffSnider_AIP) February 2, 2022 In the middle of last...

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Not Just Where They Area, Where They Seem To Be Heading

By no means are any of these PMI numbers terrible. In the vacuum of mainstream Economics’ ceteris paribus fantasy, these might all be mildly pleasing. There is no such thing, however, and despite where they now are these are verging closer to comparisons which could be, several already have been, concerning. As such, the direction and trend being established as the US (and global) economy behaves in the same way we’ve seen four times (since 2007) already should be the focus. Start...

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Eurodollar Futures Curve Update (spoiler: still inverted)

I guess I took my own advice a little too literally. I did write that when the eurodollar futures curve first inverted, it was going to be dull. Didn’t start out that way, of course, with a small bit of theatrics right during that front week in December when the inversion first showed up. Ever since then, it has stuck to what I had said on Day 2 about what you should expect, or not to: For the time being, our focus for now remains on the twisting. And we shouldn’t expect much more out of...

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Inflationary Overheating, Tapering and Terminating QE, We’ve Seen These Before And It Didn’t End The Way It Was Supposed To

The economy was in danger of running hot, too hot they all said. In order to stay ahead of such inflation potential, as central bankers saw it, first it would be necessary to wind down quantitative easing. Taper then terminate. After that, rate hikes.Hawks buzzing around everywhere.But Mario Draghi’s ECB had a problem. The inflationary pressures were there, he reasoned, just no one including Mario himself could find them in evidence. More worrisome than that, Europe’s economy also appeared...

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