Monday , June 17 2019
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Tag Archives: rate cuts

Curve-sanity

There are those which are so very clear in their disingenuousness – to the point of overdoing it and becoming obviously absurd. In the increasingly desperate rush to downplay the headlong race to rate cuts, this one’s up there: Eurodollar futures traders, having decided that the Federal Reserve is likely to cut the fed funds target range at least twice over the next six months, are looking beyond the expected easing cycle in search of their next edge — the point at which rates will...

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All Of US Trade, Both Ways, And Much, Much More Than The Past Few Months

The media quickly picked up on Jay Powell’s comments this week from Chicago. Much less talked about was why he was in that particular city. The Federal Reserve has been conducting what it claims is an exhaustive review of its monetary policies. Officials have been very quick to say they aren’t unhappy with them, no, no, no, they’re unhappy with the pitiful state of the world in which they have to be applied. That’s not quite how this central bank quandary is being characterized, of course....

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The Rate Cuts Have Already Started

In case you missed it, the rate cuts have already started. They actually began last year among the major economies in India. If we are counting only DM countries, then Australia and New Zealand are first out of the gate; the latter smaller country beating the larger former by around a month. In a way, it is fitting how even in rate cuts there is escalation. And in doing so, it has become perfectly clear what’s got them so bothered. Well, perfectly clear about “what” if not so much about...

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Janus Powell

Again, who’s following who? As US Treasury yields drop and eurodollar futures prices rise, signaling expectations for lower money rates in the near future, Federal Reserve officials are catching up to them. It was these markets which first took further rate hikes off the table before there ever was a Fed “pause.” Now that the Fed is paused, it’s been these same markets increasingly projecting not just a rate cut or two but an entire series of them. Playing from behind once more, Chairman...

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What Kind Of Risks/Mess Are We Looking At?

The fact that the mainstream isn’t taking this all very seriously isn’t anything new. But how serious are things really? That’s pretty much the only question anyone should be asking. What are the curves telling us about what’s now just over the horizon? I hesitate to use 2008 comparisons too often because many people immediately jump to extrapolations, especially in these more esoteric market indications. If you say something is like 2007 or 2008, people think you are saying we are on the...

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How Do You Get A September Rate Cut?

When the eurodollar futures curve first inverted a year ago in the wake of May 29, 2018, it was the market beginning to hedge against serious and rising risks of something that would force the Federal Reserve to turn around. When that might happen, or how many cuts would eventually follow, those were questions the immediate inversion couldn’t answer. All the curve said at that point was a serious chance Jay Powell was going to be forced into an involuntarily U-turn at some indeterminate...

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Chart (Deluge) Of The Month

In Europe, the ECB’s minutes for its April 2019 meeting claimed: Financial market developments, which were typically more forward looking, were more upbeat. In the US, the Federal Reserve’s minutes for its April 2019 meeting claimed: Participants noted that even if global economic and financial conditions continued to improve, a patient approach would likely remain warranted, especially in an environment of continued moderate economic growth and muted inflation pressures. Let’s see if we can...

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Durable Goods And 1998

We have arrived at revisions season once again. It’s that time of year when many if not most (I don’t actually keep track) of economic accounts undergo heightened scrutiny. More data is collected from more comprehensive surveys using far larger samples. These are compared to the existing high frequency panels and changes are made as necessary. Sometimes these are substantial, as we’ve been noting for the past half-decade or so. As is the tendency near always on the downside. This year is...

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With Rate Cuts Looming, A Necessary Bit of Perspective Before Going Into Them

It is sometimes amazing what happens when you add just a little perspective. In some cases, it doesn’t require much at all to do so. One little addendum can upend the entire message, leading you off into entirely different interpretations. The implications can be enormous. To see what I mean, let’s begin with the basics. Below is what the public is shown, or thereabouts. The economy is booming at record high GDP: At first glance, even a deeper gaze, it’s next to impossible to see anything...

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COT Blue Supplement: OI Warned Again Last Week

Nervous people tend not to sit still. The term nervous energy means just that. When you’re worried about something, your mind is telling you to use up the resources your body is providing to search for a fix to whatever it is that’s bothering you. Mitigation at the very least. It really is a simple thing sometimes. In the UST futures market, if you have large financial positions leveraged in every way possible, there’s already risk. If you start to be worried more than normal, you’re going to...

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