Tag Archives: Dollar

Effective federal funds (EFF) was 1.92% again yesterday. That’s now eight in a row just 3 bps underneath the “technically adjusted” IOER. If indeed the FOMC has to make another one to this tortured tool we know already who will be blamed for it. The Treasury Department announced yesterday that it will be auctioning off $65 billion in 4-week bills this week (today). The results showed that dealers submitted $152 billion...

At this particular juncture eight months into 2018, the only thing that will help is abrupt and serious acceleration. On this side of May 29, it is way past time for it to get real. The global economy either synchronizes in a major, unambiguous breakout or markets retrench even more. That’s been the basis of this thing from Day 1; or, more accurately, Day 3.01. Reflation #3 wasn’t really any different in type from...

Americans are spending more on filling up. A lot more. According the Census Bureau, retail sales at gasoline stations had increased by nearly 20% year-over-year (unadjusted) in both May and June 2018. In the latest figures for July, released today, gasoline station sales were up by more than 21%. The last time they surged this much was September 2011, also the last time oil prices were having this big of an effect on...

Why is SHIBOR falling from an economic perspective? Simple again. China’s growth both on its own and as a reflection of actual global growth has stalled. And in a dynamic, non-linear world stalled equals trouble. Going all the way back to early 2017, there’s been no acceleration (and more than a little deceleration). The reflation economy got started in 2016 but it never went anywhere. For most of last year, optimists...

See the introduction and the video for the terms gold basis, co-basis, backwardation and contango. Explaining a new paradigm can be both simple and impossible at the same time. For example, Copernicus taught that the other planets and Sun do not revolve around the Earth. He said that all the planets revolve around the Sun, including Earth. It isn’t hard to say, and it isn’t especially hard to grasp. Indeed, one of its...

In early 2011, Chinese consumer prices were soaring. Despite an official government mandate for 3% CPI growth, the country’s main price measure started out the year close to 5% and by June was moving toward 7%. It seemed fitting for the time, no matter how uncomfortable it made PBOC officials. China was going to be growing rapidly even if the rest of the world couldn’t. Back then, Western Economists were concerned...

On Moneyness, JP Koning discusses the ability or not of the U.S. treasury to enforce financial sanctions overseas. Focusing on the Iran sanctions that ran from 2010 to 2015 (with strong international support) and are scheduled to be reimposed soon (without such support) Koning compares the U.S. sanctions regime to an exclusivity agreement that a large retailer imposes on a manufacturer. Foreign banks in places like Europe were free to continue providing transactions services to Iran, but...

The People’s Bank of China won’t update its balance sheet numbers for May until later this month. Last month, as expected, the Chinese central bank allowed bank reserves to contract for the first time in nearly two years. It is, I believe, all part of the reprioritization of monetary policy goals toward CNY. How well it works in practice remains to be seen. Authorities are not simply contracting one important form of...

Markit Economics released the flash results from several of its key surveys. Included is manufacturing in Japan (lower), as well as composites (manufacturing plus services) for the United States and Europe. Within the EU, Markit offers details for France and Germany. Given the nature of sentiment surveys, we tend to ignore these most months unless they suggest either pending changes or extremes. Beginning with the US,...

Chinese exports rose 12.9% year-over-year in April 2018. China Exports, Jan 2008 - Apr 2018(see more posts on China Exports, ) - Click to enlarge Imports were up 20.9%. As always, both numbers sound impressive but they are far short of rates consistent with a growing global economy. China’s participation in global growth, synchronized or not, is a must. The lack of acceleration on the export side tells us a lot...