Tag Archive: Yield Curve

Monthly Macro Monitor: Doom & Gloom, Good Grief

2019-10-12

Economic Growth & Investment, October 2019

When I first got in this business oh so many years ago, my mentor told me that I shouldn’t waste my time worrying about the things everyone else was worrying about. As I’ve related in these missives before, he called those things “well worried”. His point was that once everyone was aware of something it was priced into the market and not worth your time.

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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

Federal Reserve Balance Sheet, 2001-2019

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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Just Who Was The Intended Audience For The Rate Cut?

2019-09-07

by Jeffrey P. Snider

2019-09-07

Federal Reserve Beige Book, December 2010 - September 2019

Federal Reserve policymakers appear to have grown more confident in their more optimistic assessment of the domestic situation. Since cutting the benchmark federal funds range by 25 bps on July 31, in speeches and in other ways Chairman Jay Powell and his group have taken on a more “hawkish” tilt. This isn’t all the way back to last year’s rate hikes, still a pronounced difference from a few months ago.

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Monthly Macro Monitor: Market Indicators Review

2019-08-30

by Joseph Y. Calhoun

2019-08-30

US 10 Year Treasury Yield Index, Sep 2017 - Aug 2019

The Treasury market continues to price in lower nominal and real growth. The stress, the urgency, I see in some of these markets is certainly concerning and consistent with what we have seen in the past at the onset of recession. The move in Treasuries is by some measures, as extreme as the fall of 2008 when we were in a full blown panic.

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Monthly Macro Monitor: Does Anyone Not Know About The Yield Curve?

2019-08-26

by Joseph Y. Calhoun

2019-08-26

The yield curve’s inverted! The yield curve’s inverted! That was the news I awoke to last Wednesday on CNBC as the 10 year Treasury note yield dipped below the 2 year yield for the first time since 2007. That’s the sign everyone has been waiting for, the definitive recession signal that says get out while the getting is good.

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FX Daily, August 15: Animal Spirits Lick Wounds

2019-08-15

by Marc Chandler

2019-08-15

Overview: It took some time for investors to recognize that the scaling back of US tariff plans was not part of a de-escalation agreement. There was an explicit acknowledgment by US Commerce Secretary Ross that there was no quid pro quo. The US tariff split was more about the US than an overture to China.

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Why You Should Care Germany More and More Looks Like 2009

2019-08-14

by Jeffrey P. Snider

2019-08-14

Germany ZEW Financial Market Survey, 2006-2019

What if Germany’s economy falls into recession? Unlike, say, Argentina, you can’t so easily dismiss German struggles as an exclusive product of German factors. One of the most orderly and efficient systems in Europe and all the world, when Germany begins to struggle it raises immediate questions about everywhere else.

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Monthly Macro Monitor: We’re Not There Yet

2019-07-21

by Joseph Y. Calhoun

2019-07-21

I first wrote about the current economic slowdown a year ago and Jeff Snider actually started seeing signs of slowdown in the Eurodollar market as early as May 2018. So, the slowdown we’re in now certainly isn’t a surprise here at Alhambra. I think though that we often forget how long these things take to develop.

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More What’s Behind Yield Curve: Now Two Straight Negative Quarters For Corporate Profit

2019-06-01

by Jeffrey P. Snider

2019-06-01

The Bureau of Economic Analysis (BEA) piled on more bad news to the otherwise pleasing GDP headline for the first quarter. In its first revision to the preliminary estimate, the government agency said output advanced just a little less than first thought. This wasn’t actually the substance of their message.

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Europe Comes Apart, And That’s Before #4

2019-05-30

by Jeffrey P. Snider

2019-05-30

In May 2018, the European Parliament found that it was incredibly popular. Commissioning what it calls the Eurobarameter survey, the EU’s governing body said that two-thirds of Europeans inside the bloc believed that membership had benefited their own countries. It was the highest showing since 1983. Voters in May 2019 don’t appear to have agreed with last year’s survey.

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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....

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Proposed Negative Rates Really Expose The Bond Market’s Appreciation For What Is Nothing More Than Magic Number Theory

2019-05-23

by Jeffrey P. Snider

2019-05-23

By far, the biggest problem in Economics is that it has no sense of itself. There are no self-correction mechanisms embedded within the discipline to make it disciplined. Without having any objective goals from which to measure, the goal is itself. Nobel Prize winning economist Ronald Coase talked about this deficiency in his Nobel Lecture:

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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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Monthly Macro Monitor: Well Worried

2019-03-28

by Joseph Y. Calhoun

2019-03-28

Yield Curve and Lending Standards 1990-2018

Don’t waste your time worrying about things that are well worried. Well worried. One of the best turns of phrase I’ve ever heard in this business that has more than its fair share of adages and idioms. It is also one of the first – and best – lessons I learned from my original mentor in this business. The things you see in the headlines, the things everyone is already worried about, aren’t usually worth fretting over.

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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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Chart(s) of the Week: Reviewing Curve Warnings

2019-03-19

by Jeffrey P. Snider

2019-03-19

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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Not Buying The New Stimulus

2019-03-08

by Jeffrey P. Snider

2019-03-08

What just happened in Europe? The short answer is T-LTRO. The ECB is getting back to being “accommodative” again. This isn’t what was supposed to be happening at this point in time. Quite the contrary, Europe’s central bank had been expecting to end all its programs and begin normalizing interest rates.

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Lost In Translation

2019-02-08

by Jeffrey P. Snider

2019-02-08

Since I don’t speak Japanese, I’m left to wonder if there is an intent to embellish the translation. Whoever is responsible for writing in English what is written by the Bank of Japan in Japanese, they are at times surely seeking out attention. However its monetary policy may be described in the original language, for us it has become so very clownish.

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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.

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Monthly Macro Monitor – January 2019

2019-01-27

by Joseph Y. Calhoun

2019-01-27

A Return To Normalcy. In the first two years after a newly elected President takes office he enacts a major tax cut that primarily benefits the wealthy and significantly raises tariffs on imports. His foreign policy is erratic but generally pulls the country back from foreign commitments. He also works to reduce immigration and roll back regulations enacted by his predecessor.

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