Tag Archive: eurodollar futures

Global Doves Expire: Fed Pause Fizzles (US Retail Sales)

2019-05-18

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2019-05-18

Retail Sales, NSA 2010-2019
Before the stock market’s slide beginning in early October, for most people they heard the economy was booming, the labor market was unbelievably good, an inflationary breakout just over the horizon. Jay Powell did as much as anyone to foster this belief, chief caretaker to the narrative. He and his fellow central bankers couldn’t use the word “strong” enough.

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The Real End of the Bond Market

2019-03-22

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2019-03-22

US Treasury Yield Curve
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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Chart(s) of the Week: Reviewing Curve Warnings

2019-03-19

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2019-03-19

Eurodollar Futures Curve 2018
Quick review: stocks hit a bit of a rough patch right during the height of inflation hysteria. At the end of January 2018, just as the US unemployment rate had finally achieved the very center of attention, global markets were rocked by instability. Unexpectedly, of course.

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FOMC Minutes: The New Narrative Takes Shape

2019-02-22

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2019-02-22

Money Markets Equivalents 2009-2018
Nothing the Fed did today, or has done up to today, has changed the curves. Eurodollar futures and UST’s, they are both still inverted. The former sharply inverted. The only thing that has changed since early January is the narrative – and not in a charitable way. It is treated as a positive when it is a pretty visible signal about deteriorating circumstances.

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LIBOR Was Expected To Drop. It Dropped. What Might This Mean?

2019-02-08

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2019-02-08

Money Markets Equivalents 2007
Everyone hates LIBOR, until it does something interesting. It used to be the most boring interest rate in the world. When it was that, it was also the most important. Though it followed along federal funds this was only because of the arb between onshore (NYC) and offshore (mainly London, sometimes Caymans) conducted by banks between themselves and their subs (whichever was located where).

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Bond Curves Right All Along, But It Won’t Matter (Yet)

2019-02-03

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2019-02-03

Real GDP in the Eurodollar Era 1993-2017
Men have long dreamed of optimal outcomes. There has to be a better way, a person will say every generation. Freedom is far too messy and unpredictable. Everybody hates the fat tails, unless and until they realize it is outlier outcomes that actually mark progress. The idea was born in the eighties that Economics had become sufficiently advanced that the business cycle was no longer a valid assumption.

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Nothing To See Here, It’s Just Everything

2019-01-04

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2019-01-04

NYMEX WTI Futures 2016-2018
The politics of oil are complicated, to say the least. There’s any number of important players, from OPEC to North American shale to sanctions. Relating to that last one, the US government has sought to impose serious restrictions upon the Iranian regime. Choking off a major piece of that country’s revenue, and source for dollars, has been a stated US goal.

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Chart of the Week: The Dreaded Full Frown

2019-01-01

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2019-01-01

Eurodollar Futures Curve 2019-2024
I’m going to break my personal convention and use the bulk of the colors in the eurodollar futures spectrum, not just the single EDM’s (June) contained within each. The current front month is January 2019, and its quoted price as I write this is 97.2475. The EDH (March) 2019 contract trades at 97.29 currently and it will drop off the board on March 18.

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Converging Views Only Starts With Fed ‘Pause’

2018-12-08

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2018-12-08

US Trade, SA 2014-2018
There’s no sign of inflation, markets are unsettled, and now new economic data keeps confirming that dark side. Forget each month, every day there is something else suggesting a slowdown. That much had been evident across much of the global economy, but this is now different. The US has apparently been infected, too, not that that is any surprise.

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Eurodollar Futures: Powell May Figure It Out Sooner, He Won’t Have Any Other Choice

2018-11-20

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2018-11-20

Eurodollar Futures Curve, May - Sep 2018
For Janet Yellen, during her somewhat brief single term she never made the same kind of effort as Ben Bernanke had. Her immediate predecessor, Bernanke, wanted to make the Federal Reserve into what he saw as the 21st century central bank icon. Monetary policy wouldn’t operate on the basis of secrecy and ambiguity. Transparency became far more than a buzzword.

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Make Your Case, Jay

2018-09-28

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2018-09-28

Eurodollar Futures June 2020
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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Downslope CPI

2018-09-16

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2018-09-16

CPI Expectations vs. Movement 1995-2018
Cushing, OK, delivered what it could for the CPI. The contribution to the inflation rate from oil prices was again substantial in August 2018. The energy component of the index gained 10.3% year-over-year, compared to 11.9% in July. It was the fourth straight month of double digit gains.

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Europe Starting To Reckon Eurodollar Curve

2018-09-14

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2018-09-14

Europe Industrial Production 2016-2018
We’ve been here before. Economists and central bankers become giddy about the prospects for success, meaning actual recovery. For that to happen, reflation must first attain enough momentum. If it does, as is always forecast, reflation becomes recovery. The world then moves off this darkening path toward the unknown crazy.

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US: Reflation Check

2017-10-05

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2017-10-05

US Recovery, 1925 - 1945
There is a difference between reflation and recovery. The terms are similar and relate to the same things, but in many ways the latter requires first the former.  To get to recovery, the economy must reflate if in contraction it was beaten down in money as well as cyclical forces. In the Great Crash of 1929 and after, reflation was required because of the wholesale devastation of the money supply. 

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Deja Vu

2017-09-01

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2017-09-01

Central Bank Rate Decomposition
According to orthodox theory, if interest rates are falling because of term premiums then that equates to stimulus. Term premiums are what economists have invented so as to undertake Fisherian decomposition of interest rates (so that they can try to understand the bond market; as you might guess it doesn’t work any better). It is, they claim, the additional premium a bond investor demands so as to hold a security that much longer (more return to...

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Data Dependent: Interest Rates Have Nowhere To Go

2017-08-18

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2017-08-18

US Employment Cost Index, Jan 2001 - Aug 2017
In October 2015, Federal Reserve Vice Chairman Bill Dudley admitted that the US economy might be slowing. In the typically understated fashion befitting the usual clownshow, he merely was acknowledging what was by then pretty obvious to anyone outside the economics profession.

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Repeat 2015; An Embarrassing Day For The Fed

2017-06-24

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2017-06-24

Today started out very badly for the FOMC. At 8:30am the Commerce Department reported “unexpectedly” weak retail sales while at the very same time the BLS published CPI statistics that were thoroughly predictable. Markets, at least credit and money markets, have gained a clearer idea what the Fed is actually doing and why. It’s not at all what the media suggests.

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Less Than Nothing

2017-05-25

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2017-05-25

Eurodollar Futures Dimensions, 2005 - 2007
As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs.

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Clickbait: Bernanke Terrifies Stock Investors, Again

2017-05-03

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2017-05-03

Unstable GDP Revised, April 2011 - April 2017
If you are a stock investor, you should be terrified. The most disconcerting words have been uttered by the one person capable of changing the whole dynamic. After spending so many years trying to recreate the magic of the “maestro”, Ben Bernanke in retirement is still at it.

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Optimal Lunacy

2017-04-15

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2017-04-15

Federal Funds Rate 2010-2018
In June 2012, Janet Yellen, then the Vice Chairman of the Federal Reserve, addressed an audience in Boston with what for the time seemed like a radical departure. It was the latest in a string of them, for conditions throughout the “recovery” period never did quite seem to hit the recovery stride. Because of that, there was constant stream of trial balloons suggesting how the Federal Reserve might try to overcome this economic inertia. At that...

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