Category Archives: Monetary Policy

Did Janet Yellen Hear Us?

In our piece, Reflexivity And Why The Fed Must Sell The Long End, posted on June 13th,  we warned of the dangers of a flattening yield curve based on distorted interest rates due to QE. ..some still look to the badly distorted bond … Continue reading

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Market Liquidity Conditions Still Loose As A Goose

Since the Fed began raising interest rates in December 2015,  financial market liquidity conditions have loosened considerably.   Recall our post,  Orwellian Monetary Policy,  which we wrote in May. “Tightening is Easing” Since U.S. monetary policy began tightening in December … Continue reading

Posted in Algos, Monetary Policy, Uncategorized | Tagged , , | 15 Comments

Mexican Peso Recovers All Of Its Trump Losses, Then Some

The Mexican peso,  after falling 18 percent against the dollar from the U.S. presidential election day to the day before the inauguration on January 19,  it has rallied almost 20 percent from its low, and is now up 15 percent … Continue reading

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Gary Cohn As Next Fed Chairman?

Politico out with a piece tonight citing souces that National Economic Council Director and Goldman alum, Gary Cohn, is the leading contender to replace Janet Yellen next January.    Interesting timing as it comes on the eve of Janet Yellen’s two-day … Continue reading

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QOTD: Ray Dalio

“…our responsibility now is to keep dancing but closer to the exit and with a sharp eye on the tea leaves.” – Ray Dalio, July 6, 2017 (QOTD = Quote of the Day)

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QOTD: Super Mario Speaks

“Deflationary forces have been replaced by reflationary ones.”  – Mario Draghi

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Reflexivity And Why The Fed Must Sell The Long End

The yield curve is flattening like a pancake.   Tightening cycles tend to do that. Furthermore, the effective float of 10-year and longer U.S. notes and bonds is relatively small and greatly distorts the bond market signal.   We have written … Continue reading

Posted in Bonds, Economics, Monetary Policy, Uncategorized | Tagged , , | 31 Comments

Strange Currencies and Barter 101

Once upon a time, currencies had intrinsic value.  But now the dollar slouches towards Bethlehem  Wampum. Ever wonder where the term “buck” comes from? As in “Ray Nichols, you owe me 100 bucks for our bet the Golden State Warriors would … Continue reading

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The Fed’s Overnight Reverse Repurchase Agreements

Interesting piece on Barry Ritholz’  Big Picture blog yesterday,  Implementing Monetary Policy: Perspective from the Open Market Trading Desk.    An excellent follow-up to our last week’s post, Orwellian Monetary Policy. Recall we noted the structural change in monetary policy and … Continue reading

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Orwellian Monetary Policy

“Tightening is Easing” Since U.S. monetary policy began tightening in December 2015, the Fed has added liquidity to the financial system through interest payments to banks on excess reserves and has reduced its surplus to the Treasury adding to the … Continue reading

Posted in Budget Deficit, Interest Rates, Monetary Policy, Uncategorized | Tagged | 27 Comments