Tuesday , April 7 2020
Home / Tag Archives: QT

Tag Archives: QT

Yeah…But

Yeah… Barry Bonds, a Major League Baseball (MLB) player, put up some amazing stats in his career. What sets him apart from other players is that he got better in the later years of his career, a time when most players see their production rapidly decline. Before the age of 30, Bonds hit a home run every 5.9% of the time he was at bat. After his 30th birthday, that rate almost doubled to over 10%. From age 36 to 39, he hit an astounding .351, well above his lifetime .298 batting average....

Read More »

2019: The Year of Repo

The year 2019 should be remembered as the year of repo. In finance, what happened in September was the most memorable occurrence of the last few years. Rate cuts were a strong contender, the first in over a decade, as was overseas turmoil. Both of those, however, stemmed from the same thing behind repo, a reminder that September’s repo rumble simply punctuated. To be frank, every year should be the year of repo. But by and large nobody cares because no one can see it. They don’t have an...

Read More »

Head Faking In The Empty Zoo: Powell Expands The Balance Sheet (Again)

They remain just as confused as Richard Fisher once was. Back in ’13 while QE3 was still relatively young and QE4 (yes, there were four) practically brand new, the former President of the Dallas Fed worried all those bank reserves had amounted to nothing more than a monetary head fake. In 2011, Ben Bernanke had admitted basically the same thing. But who was falling for it? The stock market, sure. Investors on Wall Street are still betting as if it will work any day now. The financial media,...

Read More »

QE By Any Other Name

“What’s in a name? That which we call a rose, By any other name would smell as sweet.” – Juliet Capulet in Romeo and Juliet by William Shakespeare Burgeoning Problem The short-term repo funding turmoil that cropped up in mid-September continues to be discussed at length. The Federal Reserve quickly addressed soaring overnight funding costs through a special repo financing facility not used since the Great Financial Crisis (GFC). The re-introduction of repo facilities has, thus far,...

Read More »

The Great LIBOR Liquidation

We are thrilled to introduce Jess L. as a new contributor to RIA. Jess started her career nearly two decades ago as a market maker at Goldman Sachs, followed by a stint at Merrill Lynch. After that, she moved over to the buy-side as a Portfolio Manager at Caxton Associates before ending her career at Millennium Partners. Throughout her career, she has had the opportunity to trade a number of different asset classes, but the one nearest & dearest to her heart is the front-end of the USD...

Read More »

Who Could Have Known: What The Repo Fiasco Entails

Imagine approaching a friend that you think is very wealthy and asking her to borrow ten thousand dollars for just one night. To entice her, you offer as collateral the title to your 2019 Lexus parked in her driveway along with an interest rate that is 5% above that which she is earning in the bank. Shockingly, your friend says she can’t. Given the risk-free nature of the transaction and excellent one-day profit, we can assume that our friend may not be as wealthy as we thought. On...

Read More »

Much More Than This Week (TRDKWTAD)

According to the recent release of the Federal Reserve’s projected forecasts, that’s it. It wasn’t one and done like Chairman Powell had initially indicated, this “midcycle adjustment” hits two. And that is it, at least if you believe the current calculations spit out by the Fed’s models. It goes along with Powell’s blunt statement he made at the press conference on Wednesday broadcasting the second cut. The cut had already been superseded, big time, by events in money markets. Most people...

Read More »

Stuck at A: Repo Chaos Isn’t Something New, It’s The Same Baseline

Finally, finally the global bond market stopped going in a straight line. I write often how nothing ever does, but for almost three-quarters of a year the guts of the financial system seemed highly motivated to prove me wrong. Yields plummeted and eurodollar futures prices soared. It is only over the past few weeks that rates have backed up in what has been the first real selloff since last year. Is this a meaningful change? It may seem that way in certain places. The ECB has launched a more...

Read More »

Sure, One and Done

The FOMC yesterday reiterated their stance that the economy was strong. But they also hedged. A one-and-done rate cut is one thing, some insurance (allegedly) for keeping the good times rolling. What about QT, though? That’s the funny thing that you can’t help but get stuck on. Not bank reserves, mind you, they’re worthless (perhaps literally). Rather, Federal Reserve officials appear to be experiencing that sinking feeling, too. QT was supposed to continue unabated until the level of...

Read More »

Maybe The Grand Celebration For The Early End of QT Starts Tomorrow?

Perhaps too much attention was given to “one-and-done”, the knee-jerk disappointment over what everybody is saying was not enough “dovishness.” And while that may have been true as it relates to main star of the puppet show, rate cuts, the FOMC actually did deliver better theater at least with a secondary character. The latest official statement announced the Federal Reserve has called off QT: The Committee will conclude the reduction of its aggregate securities holdings in the System Open...

Read More »