Tag Archive: U.S. Treasuries

Data Dependent: Interest Rates Have Nowhere To Go

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.

Read More »

Bi-Weekly Economic Review: Ignore The Idiot

Of the economic releases of the past two weeks the one that got the most attention was the employment report. That report is seen by many market analysts as one of the most important and of course the Fed puts a lot of emphasis on it so the press spends an inordinate amount of time dissecting it.

Read More »

Oil Prices: The Center Of The Inflation Debate

The mainstream media is about to be presented with another (small) gift. In its quest to discredit populism, the condition of inflation has become paramount for largely the right reasons (accidents do happen). In the context of the macro economy of 2017, inflation isn’t really about consumer prices except as a broad gauge of hidden monetary conditions.

Read More »

FX Weekly Review, July 31 – August 05: Second Week of Strong CHF Losses

The Swiss Franc entered the second week of stronger losses. While the euro gained 4% last week, the dollar appreciated against the Swiss Franc 2% during this week.

Read More »

U.S. Treasuries: Not Really Wrong On Bonds

It is often said that the market for US Treasuries is the deepest and most liquid in the world. While that’s true, we have to be careful about what it is we are talking about. There is no single US Treasury market, and often differences can be striking. The most prominent example was, of course, October 15, 2014.

Read More »

Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”

‘We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.’ There are a lot of warnings on Bloomberg, CNBC and other financial media these days about a bubble in the stock market, particularly in FANG stocks and the tech sector.

Read More »

Bi-Weekly Economic Review: Extending The Cycle

This economic cycle is one of the longest on record for the US, eight years and counting since the end of the last recession. It has also been, as almost everyone knows, a fairly weak expansion, one that has managed to disappoint both bull and bear.

Read More »

FX Weekly Review, July 24 – July 29: Swiss Franc getting crushed

The Swiss franc was the only major foreign currency that fell against the dollar last week.  The 2.6% decline was the largest in two years.

Read More »

FX Weekly Review, July 17 – July 22: Euro and CHF move upwards against Dollar

Both Swiss Franc and Euro were moving upwards against the dollar. So CHF gained 3% versus the dollar in the last month. CHF losses against the euro are smaller, around 1.3%.

Read More »

FX Weekly Review, July 10 – July 15: CHF Winning against USD, but losing vs. Euro

The Euro remained the strongest among EUR, CHF and USD during the last month.  The Swiss lost against EUR 1.5%, while it gained versus the dollar 0.75%.

Read More »

US Federal Funds, Bond Market and WSJ Economic Survey: The Hidden State of Money

Correctly interpreting the bond market is more than just how and when to invest your money in UST’s. Not that it isn’t useful in such a money management capacity, but interest rates starting at the risk-free tell us a lot about what is wholly unseen. There is simply no way to directly observe inside an economy what is taking place at all levels and in all transactions. We try to estimate as best we can in the aggregate, but the real economy works...

Read More »

FX Weekly Review, July 03 – July 08: Second Euro appreciation phase

The ECB appears to be preparing investors for a further adjustment of its risk assessment and a reduction of its asset purchases as they are extended into next year. This assessment has marked a new phase of an appreciating EUR/CHF rate. It followed the previous phase, the one with and after the French elections.  

Read More »

FX Weekly Review, June 26 – July 01: Normalization Ideas Weigh on Greenback

A virus has spread across the markets as the first half drew to a close. Many investors have become giddy. The low vol environment was punctuated by ideas that peak in monetary accommodation is past and that the gradual process of normalization is beginning.

Read More »

Fading Further and Further Back Toward 2016

Earlier this month, the BEA estimated that Disposable Personal Income in the US was $14.4 trillion (SAAR) for April 2017. If the unemployment rate were truly 4.3% as the BLS says, there is no way DPI would be anywhere near to that low level. It would instead total closer to the pre-crisis baseline which in April would have been $19.0 trillion. Even if we factor retiring Baby Boomers in a realistic manner, say $18 trillion instead, what does the...

Read More »

FX Weekly Review, June 19 – June 24: Stronger Franc with Fading Euro Enthusiam

Over the last month, the Swiss franc outpaced both EUR and USD. But the change is only little, the EUR fell by 0.60% and the dollar by 0.40%. The main reason for the stronger CHF is the fading enthusiasm after Macron's victory in the French elections and hence a weaker euro. Consequently SNB interventions are rising again.

Read More »

Bond Yields, Inflation, and More

Falling oil prices pushing down inflation expectations and lowering bond yields is the conventional narrative. It ignores that survey-based measures of inflation expectations are stable. It ignores a host of other demand factors.

Read More »

Repeat 2015; An Embarrassing Day For The Fed

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.

Read More »

FX Weekly Review, June 12 – June 17: Greenback Still Trying To Turn

Swiss Franc vs USD and EUR Rarely in the foreign exchange market is there a V-shaped extreme. Most of the time, the high or low is a process that is carved over time. Although the explanation of the dollar’s weakness here in H1 vary, we continue to believe that the longer-term cyclical rally, the third since … Continue reading »

Read More »

Deciphering Curves

What is the yield curve supposed to look like? It’s a simple question that doesn’t actually have an answer. And because it doesn’t, there is a whole lot of confusion about bond yields.

Read More »

FX Weekly Review, June 05 – June 10: Sterling Leads Dollar Recovery

The US Dollar has lost 4% against the franc since the beginning of May, while the euro is down only 1%. Most important events in this week were the ECB meeting and the UK elections. The inability of the Tory Party to secure a parliamentary majority spurred a sharp decline in sterling.

Read More »