Tag Archives: bonds

Whomever actually coined the term “taper”, using it in the context of Federal Reserve QE for the first time, it wasn’t actually Ben Bernanke. On May 22, 2013, the central bank’s Chairman sat in front of Congressman Kevin Brady and used the phrase “step down in our pace of purchases.” No good, at least from the perspective of a media-driven need for a snappy one-word summary. Taper. Then the tantrum. Except, no, it wasn’t sulking rage over the prospects for fewer...

Today is the 50th anniversary of the “Nixon shock”, the day President Richard Nixon closed the gold window and ended the post-WWII Bretton Woods currency agreement. That agreement, largely a product of John Maynard Keynes, pegged the dollar to gold and most other currencies to the dollar. It wasn’t a true gold standard as only other countries that were party to the agreement could demand gold in exchange for their dollars, but it was at least a standard of some...

A momentous day, for sure, but one lost in what would turn out to be a seemingly endless sea of them. October 8, 2008, right in the thick of the world’s first global financial crisis (how could it have been global, surely not subprime mortgages?) the Federal Reserve took center stage; or tried to. Having bungled Lehman, botched AIG, and then surrendered to Treasury which then screwed up TARP, the world’s entire financial edifice was burning down while US...

Remember “The New Normal”? Back in 2009, Bill Gross, the old bond king before Gundlach came along, penned a market commentary called “On the Course to a New Normal” which he said would be: “a period of time in which economies grow very slowly as opposed to growing like weeds, the way children do; in which profits are relatively static; in which the government plays a significant role in terms of deficits and reregulation and control of the economy; in which the...

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...

[unable to retrieve full-text content]If you were waiting for a correction in stock prices to put some money to work, you got your chance last week. The Dow Jones Industrial Average was down nearly 1000 points at the low Monday and closed down 725, a loss of a little over 2%. The S&P 500 did a little better but closed down 1.5%.

[unable to retrieve full-text content]89.2 China Warns World of (Next?) Dollar Disorder. The People’s Bank of China lowers its bank Required Reserve Ratio to get money into a slowing economy. A lowered RRR means that there aren’t enough (euro)dollars flowing into China. Why? Because there aren’t enough (euro)dollars in the world. A lower RRR is a warning for the whole world.

[unable to retrieve full-text content]Global factors, meaning that the wave of significantly higher deflationary potential (therefore, diminishing inflationary chances which were never good to begin with) in global bond yields the past five months have seemingly focused on troubles brewing outside the US. Overseas turmoil, it was called back in 2015, leaving by default a picture of relative American strength and harmony.

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...

Central bankers nearly everywhere have succumbed to recovery fever. This has been a common occurrence among their cohort ever since the earliest days of the crisis; the first one. Many of them, or their predecessors, since this standard of fantasyland has gone on for so long, had caught the malady as early as 2007 and 2008 when the world was only falling apart. The disease is just that potent; delirium the chief symptom, especially among the virus’ central banker...