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Tag Archives: us treasuries

Until This Changes, Forget Inflation: Banks Bought Epic Amounts of Safe, Liquid Assets in H1 ’21

The first half of 2021 was inundated with government helicopters, more QE’s, and then CPI’s put up with guarantees the “inflation” was going to continue for a long time. Jamie Dimon, JP Morgan’s often hapless CEO, proudly declared US Treasuries beyond the touch of any 10-foot pole. With the economy on fire, he “reasoned”, who would ever want safe and liquid instruments?The Federal Reserve, ironically, since Mr. Dimon is always on the Fed’s side, provides us with a more than partial answer....

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Maybe More Autumn Than Strictly August

Barely more than two weeks. That’s all was needed for the headlines to scream “bloodbath”, “end of the bull market”, and the always popular BOND ROUT!!! The 10-year Treasury yield had bottomed out in August and by mid-September 2019 this key benchmark rate screamed upward by 43 bps in just seven sessions. Yes, seven. To think, the financial media has made the last few trading days in the bond market seem like some uniquely gigantic earthquake never before witnessed in all of modern...

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Finally The Taper Tantrum, Or What’s Wrong With August?

If you’re fortunate to be able to do this long enough, you’re absolutely assured to get caught with your pants down and almost certainly more than once. In the short run, it’s all a crapshoot anyway. Markets fluctuate and never, ever go in a straight line. And just when you claim to be right on top, they yank the rug right out from under your conceit(s). I’ve spent the past few weeks, really months pointing out how Federal Reserve policymakers via their compliant media hasn’t been...

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Since There Is No Tantrum, Can We Taper The Dots Instead?

So much easier to just change the target, to move the goalposts. Having failed for weeks to provoke any “tantrum” to the Federal Reserve’s oncoming taper, even before today’s FOMC meeting all attention was instead simply shuffled off tapering QE and onto rate hikes. Bring the dots back! Anything to keep up the idea the Fed is a central bank in control of money stuff.A single dot maybe two get moved and we’re told to consider this terrific optimism and terrible hawkishness (if you are...

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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...

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Bills Flipping The Debt Ceiling

The dollar stopped falling on January 6, beginning a reversal which has lasted more than eight months. This forewarning was joined two days later when TIPS breakevens crossed, inverting the 5-year when compared to the 10-year. About a week after that, T-bills.In other words, as I had written up last week, there actually were quite a few contrary indications in January 2021 just like there had been during September 2017. These may have been less loud than four years ago, yet proving to have...

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CPI Comes ‘Home’ To The Other Side of Inverted TIPS

January 2021 was, it may have seemed, only the start of something big. Huge. Colossal. Coronavirus vaccines had been discovered, publicized, and rolled out, meaning for the first time a real shot at ending the pandemic. The world could quickly get back to normal, the economy recovering its footing, and between January and that bright future Uncle Sam was going to flood not just the US but much of the rest of the world (starting with US imports) with Treasury’s cash.Everything appeared to be...

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Too Much (about) Taper, Not (yet) Too Many Treasuries

Almost universally, the comeback is always QE. Whenever trying to discuss the bond market’s unmovable pessimism in 2021, especially now about six months after reflation ended, people just don’t want to hear about such low (and lower) growth and inflation expectations in nominal yields. No, that’s not deflationary potential, they’d say, it was and is the Fed buying bonds which has kept a lid on rates.If not for Jay Powell and his penchant for “monetizing” his buddy Yellen’s offerings, then,...

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The Eurodollar’s Nose

What an intriguingly odd month September 2017 turned out to be. To start with, Reflation #3 only seemed to be gaining strength. The full throat behind Inflation Hysteria #1 was still ahead, as was its related personage the BOND ROUT!!!! And yet, early in that late summer month a sudden eruption; actually several. On September 5, T-bills. A day later a big one, CNY. Gold. Repo fails. And on and on. While Reflation #3 would continue forward, and after October 2017 it seemed like the...

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The Fed’s True Love: He Tapers Me, He Tapers Me Not

They were doing so well, or at least not quite as bad as throughout the prior several decades. Through this year’s 5% CPI’s, Federal Reserve policymakers stuck to their gut not their heart. Transitory factors. Right call (as we’ll see in a minute). That won’t be their mistake. On the contrary, these Economists (central bankers are all Economists nowadays, and the few who aren’t have only worked for them) continue to fall head over heels in love with the unemployment rate. Despite missing so...

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