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Tag Archives: QT

Peak Policy Error

Another economic discussion lost to the eventual coronavirus pandemic mania was the 2019 globally synchronized downturn. Not just downturn, outright recession in key parts from around the world, maybe including the US. We’ll simply never know for sure because just when it was happening COVID struck and then governments overrode everything including unfolding history. What anyone can say for sure is that 2019 hit a rough patch where there was only supposed to have...

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Collateral Shortage…From *A* Fed Perspective

It’s never just one thing or another. Take, for example, collateral scarcity. By itself, it’s already a problem but it may not be enough to bring the whole system to reverse. A good illustration would be 2017. Throughout that whole year, T-bill rates (4-week, in particular) kept indicating this very shortfall, especially the repeated instances when equivalent bill yields would go below the RRP “floor” and often stay there for prolonged periods. There was, as I wrote...

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I Told You It *Wasn’t* Money Printing; How The Fed Helped Cause, But Can’t Solve, Our Current ‘Inflation’

Trust the Fed. Ha! It’s one thing for money dealers to look upon Jay Powell’s stash of bank reserves with remarkable disdain, more immediately damning when effects of the same liquidity premiums in the real economy create serious frictions leaving the entire world exposed to the consequences. When all is said and done, the Federal Reserve has created its own doom-loop from which it won’t likely escape. The 2022 FOMC has made itself plain, incredibly hawkish to an...

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2019: The Year of Repo

The year 2019 should be remembered as the year of repo. In finance, what happened in September was the most memorable occurrence of the last few years. Rate cuts were a strong contender, the first in over a decade, as was overseas turmoil. Both of those, however, stemmed from the same thing behind repo, a reminder that September’s repo rumble simply punctuated. To be frank, every year should be the year of repo. But by and large nobody cares because no one can see...

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Head Faking In The Empty Zoo: Powell Expands The Balance Sheet (Again)

They remain just as confused as Richard Fisher once was. Back in ’13 while QE3 was still relatively young and QE4 (yes, there were four) practically brand new, the former President of the Dallas Fed worried all those bank reserves had amounted to nothing more than a monetary head fake. In 2011, Ben Bernanke had admitted basically the same thing. But who was falling for it? The stock market, sure. Investors on Wall Street are still betting as if it will work any day...

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Stuck at A: Repo Chaos Isn’t Something New, It’s The Same Baseline

Finally, finally the global bond market stopped going in a straight line. I write often how nothing ever does, but for almost three-quarters of a year the guts of the financial system seemed highly motivated to prove me wrong. Yields plummeted and eurodollar futures prices soared. It is only over the past few weeks that rates have backed up in what has been the first real selloff since last year. Is this a meaningful change?   It may seem that way in certain places....

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FX Daily, February 13: QT is not the Opposite of QE

Swiss Franc The Euro has fallen by 0.25% at 1.1367 EUR/CHF and USD/CHF, February 13(see more posts on EUR/CHF and USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates The Federal Reserve has long been clear on the sequence of events as it innovated the playbook during the Great Financial Crisis. There would be a considerable period between when the Fed would finish its credit easing operations that...

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