Tag Archive: EFF

Banks Or (euro)Dollars? That Is The (only) Question

2020-04-03

UST Yields & Money Alternates, 2007-2009

It used to be that at each quarter’s end the repo rate would rise often quite far. You may recall the end of 2018, following a wave of global liquidations and curve collapsing when the GC rate (UST) skyrocketed to 5.149%, nearly 300 bps above the RRP “floor.” Chalked up to nothing more than 2a7 or “too many” Treasuries, it was to be ignored as the Fed at that point was still forecasting inflation and rate hikes.

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Tidbits Of Further Warnings: Houston, We (Still) Have A (Repo) Problem

2019-10-18

by Jeffrey P. Snider

2019-10-18

Federal Reserve Balance Sheet, 2001-2019

Despite the name, the Fed doesn’t actually intervene in the US$ repo market. I know they called them overnight repo operations, but that’s only because they mimic repo transactions not because the central bank is conducting them in that specific place. What really happened was FRBNY allotting bank reserves (in exchange for UST, MBS, and agency collateral) only to the 24 primary dealers.

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

2019-10-09

by Jeffrey P. Snider

2019-10-09

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.

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What’s The Verdict On This Week?

2019-09-21

by Jeffrey P. Snider

2019-09-21

Jay Powell’s disastrous week is coming to a close, not yet his long nightmare. He has been battling fed funds (meaning repo) for his entire tenure dating back to February 2018. This week wasn’t the conclusion to the contest, just the latest and biggest round of it.

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COT Blue: Distinct Lack of Green But A Lot That’s Gold

2019-04-24

by Jeffrey P. Snider

2019-04-24

Gold, in my worldview, can be a “heads I win, tails you lose” proposition. If it goes up, that’s fear. Nothing good. If it goes down, that’s collateral. In many ways, worse. Either way, it is only bad, right? Not always. There are times when rising gold signals inflation, more properly reflation perceptions. Determining which is which is the real challenge.

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Phugoid Dollar Funding

2019-04-04

by Jeffrey P. Snider

2019-04-04

On August 12, 1985, Japan Airways flight 123 left Tokyo’s Haneda Airport on its way to a scheduled arrival in Osaka. Twelve minutes into the flight, the aircraft, a Boeing 747, suffered catastrophic failure when an aft pressure bulkhead burst.

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The Real End of the Bond Market

2019-03-22

by Jeffrey P. Snider

2019-03-22

These things are actually quite related, though I understand how it might not appear to be that way at first. As noted earlier today, the Fed (yet again) proves it has no idea how global money markets work. They can’t even get federal funds right after two technical adjustments to IOER (the joke).

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Make Your Case, Jay

2018-09-28

by Jeffrey P. Snider

2018-09-28

June 13 sticks out for both eurodollar futures as well as IOER. On the surface, there should be no bearing on the former from the latter. They are technically unrelated; IOER being a current rate applied as an intended money alternative. Eurodollar futures are, as the term implies, about where all those money rates might fall in the future. Still, the eurodollar curve inverted conspicuously starting June 13. That was the day of the prior “rate...

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Anticipating How Welcome This Second Deluge Will Be

2018-08-29

by Jeffrey P. Snider

2018-08-29

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.

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