Tag Archive: jay powell

Janus Powell

2019-06-09

Again, who’s following who? As US Treasury yields drop and eurodollar futures prices rise, signaling expectations for lower money rates in the near future, Federal Reserve officials are catching up to them. It was these markets which first took further rate hikes off the table before there ever was a Fed “pause.”

Read More »

The Transitory Story, I Repeat, The Transitory Story

2019-05-24

by Jeffrey P. Snider

2019-05-24

Understand what the word “transitory” truly means in this context. It is no different than Ben Bernanke saying, essentially, subprime is contained. To the Fed Chairman in early 2007, this one little corner of the mortgage market in an otherwise booming economy was a transitory blip that booming economy would easily withstand. Just eight days before Bernanke would testify confidently before Congress, the FOMC had met to discuss their lying eyes....

Read More »

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

2019-05-18

by Jeffrey P. Snider

2019-05-18

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.

Read More »

No Surprise, Hysteria Wasn’t a Sound Basis For Interpretation

2019-02-28

by Jeffrey P. Snider

2019-02-28

Labor Utilization Total Hours Worked 2008-2018

What gets them into trouble is how they just can’t help themselves. Go back one year, to early 2018. Last February it was all-but-assured (in mainstream coverage) that the US economy was going to take off. The bond market, meaning UST’s, was about to be massacred because the overheating boom would force a double shot down its throat.

Read More »

FOMC Minutes: The New Narrative Takes Shape

2019-02-22

by Jeffrey P. Snider

2019-02-22

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.

Read More »

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

2019-02-08

by Jeffrey P. Snider

2019-02-08

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).

Read More »

Fear Or Reflation Gold?

2019-02-04

by Jeffrey P. Snider

2019-02-04

Gold is on fire, but why is it on fire? When the precious metals’ price falls, Stage 2, we have a pretty good idea what that means (collateral). But when it goes the other way, reflation or fear of deflation? Stage 1 or Stage 3? If it is Stage 1 reflation based on something like the Fed’s turnaround, then we would expect to find US$ markets trading in exactly the same way.

Read More »

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

2019-02-03

by Jeffrey P. Snider

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.

Read More »

Hall of Mirrors, Where’d The Labor Shortage Go?

2019-01-20

by Jeffrey P. Snider

2019-01-20

Today was supposed to see the release of the Census Bureau’s retail trade report, a key data set pertaining to the (alarming) state of American consumers, therefore workers by extension (income). With the federal government in partial shutdown, those numbers will be delayed until further notice. In their place we will have to manage with something like the Federal Reserves’ Beige Book.

Read More »

Insane Repo Reminds Us

2019-01-04

by Jeffrey P. Snider

2019-01-04

It was only near the quarter end, that’s what made it so unnerving. We may have become used to these calendar bottlenecks over the years, but they still remind us what they are. Late October 2012 was a little different, though. On October 29, the GC repo rate for UST collateral (DTCC) surged to 52.6 bps. The money market floor, so to speak, was zero at the time and IOER (the joke) 25 bps. We also have to keep in mind the circumstances of that...

Read More »

Chart of the Week: The Dreaded Full Frown

2019-01-01

by Jeffrey P. Snider

2019-01-01

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.

Read More »

Wasting the Middle: Obsessing Over Exits

2018-12-28

by Jeffrey P. Snider

2018-12-28

What was the difference between Bear Stearns and Lehman Brothers? Well, for one thing Lehman’s failure wasn’t a singular event. In the heady days of September 2008, authorities working for any number of initialism agencies were busy trying to put out fires seemingly everywhere. Lehman had to compete with an AIG as well as a Wachovia, already preceded by a Fannie and a Freddie.

Read More »

Converging Views Only Starts With Fed ‘Pause’

2018-12-08

by Jeffrey P. Snider

2018-12-08

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.

Read More »

Unexpected?

2018-12-07

by Jeffrey P. Snider

2018-12-07

Now that the slowdown is being absorbed and even talked about openly, it will require a period of heavy CYA. This part is, or at least it has been at each of the past downturns, quite easy for its practitioners. It was all so “unexpected”, you see. Nobody could have seen it coming, therefore it just showed up out of nowhere unpredictably spoiling the heretofore unbreakable, incorruptible boom everyone was talking about just last week.

Read More »

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

2018-11-20

by Jeffrey P. Snider

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.

Read More »

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...

Read More »