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Tag Archives: QE

Has The Fed Launched A Yield-Curve-Control Policy For Treasuries?

The Federal Reserve has publicly disclosed it’s considering it and many commentators have analyzed the implications. Officially, the central bank is conducting “further analysis” on so-called yield curve control (YCC). But looking at the flat trend in the 10-year Treasury yield in recent months raises the obvious question: Has YCC already started? For the uninitiated, YCC is a commitment by a central bank to buy a sufficient quantity of long-term bonds to keep the rate from...

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Europe Losing Momentum With Its Biggest Positives Ever

Italy had been one of hardest hit countries, if not the worst for a good while. For months rather than weeks, life was shut down in an effort to get ahead of COVID-19 while it ravaged seemingly unchecked. It became a buzzword of sorts, the name of the nation synonymous with the pandemic itself. Don’t be Italy.As a result, the economy was shut off more there than anywhere else at least so far as the data was concerned. But that kind of led toward hope and optimism; if the Italians could...

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Yield Caps = Toddlers

The Federal Reserve has cut its QE purchasing pace, and yet the US Treasury Department doesn’t seem hampered by a shortage of bidders for its record-setting note auctions. Far from “too many” Treasuries, prices are once more unequivocal how there aren’t enough. With or without Powell, the auction record is clear and, unlike those constantly talking up the BOND ROUT!!! that never happens, honest. Yesterday, it was the 3-year maturity. An astonishing $46 billion was sold, new high, with a...

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4/7/20: ifo Institute Eurozone Growth Outlook

Germany's ifo Institute issued a new growth outlook for Eurozone economy:"Overall, the eurozone economy is likely to see a sharp recession in the first half of 2020.  "GDP already contracted in Q1 by 3.6%.  "In Q2, the decline of GDP is forecast to be historic (-12.3%).  "On the other hand, the recovery is likely to be quick supported by massive stimuli in some eurozone countries with GDP growth reaching +8.3% in Q3 and +2.8% in Q4 2020.  "Yet, the GDP level at the end of last year will...

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3/7/20: ECB Jumping the Proverbial Shark?

ECB's money-printing press has been running overtime these weeks. So let's put the Euro area central banks' monetary policy shenanigans into perspective, comparing them to the Global Financial Crisis (GFC) related measures, the Euro area sovereign debt crisis and the subsequent painful recovery: Good thing: ECB has deployed COVID19 response at scale and fast. Bad thing: it is highly uncertain how much growth all of this activism is going to sustain. From 2000 through 1Q 2020, there is...

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Looking Ahead Through Japan

After the Diamond Princess cruise ship docked in Tokyo with tales seemingly spun from some sci-fi disaster movie, all eyes turned to Japan. Cruisers had boarded the vacation vessel in Yokohama on January 20 already knowing that there was something bad going on in China’s Wuhan. The big ship would head out anyway for a fourteen-day tour of Vietnam, Taiwan, and, yes, China.Three days in, news reached the Diamond that the Communists had closed down the affected region. Worse, on February 2,...

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Swap Mean

Little noticed at the time, October 2012 was quite the roller coaster. Most anyone cared about was QE3, the wonderful, awesome flood of liquidity kindly wise-man Chairman Bernanke had restarted for reasons that didn’t seem so important. Did it matter to the public that the repo market went haywire late in that very same month, at the very same time QE3 was in full swing?Of course not. Repo? What repo? There had been prior “floods” leading up to all this, too. In the summer of 2011, an...

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Wait A Minute, What’s This Inversion?

Back in the middle of 2018, this kind of thing was at least straight forward and intuitive. If there was any confusion, it wasn’t related to the mechanics, rather most people just couldn’t handle the possibility this was real. Jay Powell said inflation, rate hikes, and accelerating growth. Absolutely hawkish across-the-board.And yet, all the way back in the middle of June 2018 the eurodollar curve started to say, hold on a minute. That’s the part which caused so much apprehension since we...

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This *Isn’t* About Stock Prices

In the initial days and weeks of the COVID (overreaction) shutdown, layoffs and furloughs were mostly a function of that very thing. A non-economic disruption. As time has gone on, however, continued joblessness can only be a function of economic factors meaning a huge problem (deflation) that isn’t being solved by time. Because of this huge “surprise” in employment data, the assumption is being made how once the lockdowns are lifted everyone really will go right back to work and we all...

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18/6/20: Cheap Institutional Money: It’s Supply Thingy

In a recent post, I covered the difference between M1 and MZM money supply, which effectively links money available to households and institutional investors for investment purposes, including households deposits that are available for investment by the banks (https://trueeconomics.blogspot.com/2020/06/what-do-money-supply-changes-tell-us.html). Here, consider money instruments issuance to institutional investors alone: Effectively, over the last 12 years, U.S. Federal reserve has pumped...

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