Saturday , October 23 2021
Home / Tag Archives: RRP

Tag Archives: RRP

Some Next Steps To Watch For Scarce Collateral

It gets even more interesting in the bill market, not that anything here has been unexpected. And since this is the same week as Evergrande, still no hint of spillover and tightening, at least not beyond what has become typical.That means mostly on the supply side. Treasury Secretary Yellen is losing breathing room fast, meaning she’s forced to dig further into what’s on weekly offer. For instance, the last 4-week auction – conducted yesterday – only sold $10 billion when compared to $40...

Read More »

Talking To Bill About Evergrande

The US Treasury auctioned off $45 billion in 3-month (13w) bills this morning. Despite the Federal Reserve paying 5 bps for SOMA UST collateralized, for “some” reason the primary market’s players wanted this issue far more. The auction’s high was just 3.5 bps, its median 2.5. These are down from 4 bps and 3.5 bps, respectively, last Monday. With the world on edge over China’s Evergrande, it has more than a few people talking about prospects for dreaded contagion. The generic honorific...

Read More »

Another Big ‘Ide’ To Add To Deflation’s March

There’s another foreign angle to the grave misconceptions about what overseas financial entities are doing, and are made to do, with specifically US Treasury assets (and overall US$ assets more broadly). The American public, anyway, has wrongly been led to believe that those outside the US must hate the US and its dollar; at least its recklessly spendthrift government. None of those are true (except the spendthrift ways of the feds; they are that), yet another instance where Economics gets...

Read More »

Tapering The Truth

Ceremony and ritual are not just important concepts for priming and keeping faith, they are absolute essentials. There’s a reason why cult leaders make themselves appear – at every instance – indispensable while at the same time keeping their masses busy with nonsense. Can’t ever permit thinking too much lest the house of cards crash downward at the first slight breeze of independent thought.So it is with these Rites of FOMC. From back before Greenspan the “Maestro”, we have...

Read More »

Bills Down, RRP Up

The Federal Reserve has done us a solid favor by opening wide its RRP window. Quite by accident, obviously, these policymakers hardly useful monetary stewards, we now have another indication, and a more direct one (though still indirect overall), relating on the surface two seemingly very different factors. The correlation found there between T-bills and that has increased the visibility of the shadows behind both.And one which continues to prove itself. Here’s where we left off (kind of) a...

Read More »

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...

Read More »

Lower Yields And (fewer) Bills

Back on February 23, Federal Reserve Chairman Jay Powell stopped by (in a virtual, Zoom sense) the Senate Banking Committee to testify as required by law. In the Q&A portion, he was asked the following by Montana’s Senator Steve Daines: SENATOR DAINES. I just was looking at the T bill chart and noticing since the 1st of February, the one month rates have dropped in half from 0.06 to today 0.03, two months went from 0.07, to 0.02. We’re starting to get into that realm here of possibly...

Read More »

RRP No Collateral Coincidences As Bills Quirk, Too

So much going on this week in the bond market, it actually overshadowed the ridiculous noise coming from the Fed’s reverse repo. Some maybe too many want to make a huge deal out of this RRP if only because the numbers associated with it have gotten so big. To end Q2 2021, financial counterparties “lent” just about $1 trillion to the Fed.Holy cow! A trillion! There’s way too much money!Eh. The RRP, especially around its more informative margins, has little to do with too much money and...

Read More »

Eurodollar Curve Quirk Trivia, But Not Trivial To Anti-Inflation

Quirks or kinks in the eurodollar futures curve are nothing new, materializing from time to time as much for technical reasons as anything else. Still, there are those instances – such as June 2018 – when these represent meaningful changes in outlook and condition. Back in the middle of that year, the sudden inversion in the curve along the 2020-21 contracts was a true game-changer.That was when the “bond market” transitioned from skepticism about globally synchronized growth and its...

Read More »

Indirect *Bill* Bidders Aren’t Who You Think, Helping Explain the Anti-Reflation Behind Reverse Repo

Following this morning’s Treasury bill auctions, each of the last three for the three shortest maturities (4-week, 8-week, 13-week) have each priced to yield less than the new reverse repo “floor” rate set by the Federal Reserve last Thursday. The first two of those, a 4-week and an 8-week, took place on the new RRP’s first day. The latest is a sale of 13-week bills completed just this afternoon with now several days in between to have digested any possible technical overhangs. For this...

Read More »