Category Archives: Interest Rates

FOMC: Hardly Tight, Hardly Loco

The data speaks for itself. Real Effective Fed Funds Rate (REFFR) The real effective Fed Funds rate (REFFR), the Federal Reserve’s target rate of overnight commercial bank reserves lending rate less the CPI year-on-year change,  remains negative for the 36th … Continue reading

Posted in Fed, Interest Rates, Monetary Policy, Uncategorized | Tagged , , | 8 Comments

Tail Event Day: -3.29% S&P500 and +1.7 bps 10-year Yield

Something is rotten in the U.S. bond market, which is irritating the stock market, to say, the very least. Today’s 3.29 percent flop in the S&P500, coupled with a 1.7 bps rise in the 10-year yield, is very rare, and … Continue reading

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QOTD: Slouching Toward A Banana Republic

Could it be the markets are instead revolting against President Trump’s fiscal profligacy, and beginning to price in a potential debt crisis/major interest rate spike?   Just askin’. “I think the Fed is making a mistake. They are so tight. I … Continue reading

Posted in Equities, Fed, Interest Rates, Monetary Policy, Uncategorized | Tagged , | 3 Comments

QE’s Fading Legacy Moving Long Yields Higher

Summary The legacy of the Fed’s QE is fading in the bond auctions For the first time in several years, SOMA did not and will not participate in any of the September or October Treasury auctions The Treasury has to … Continue reading

Posted in Debt, Fed, Fiscal Policy, Interest Rates, Uncategorized | Tagged , , | 3 Comments

Alea Iacta Est!

As Julius Caesar crossed the Rubicon River with the 13th legion into Italy to march on Rome, he turned to one of his deputies, quite possibly, Marc Antony, and made the famous remark, “alea iacta est.”  Historians translate this as “the die … Continue reading

Posted in Bonds, German Bund, Interest Rates, Uncategorized | Tagged , , , | 19 Comments

German 10-year At 47 bps As Inflation Prints 2.3 Percent

Really efficient markets, no?   The Germans  ECB loves a real 10-year negative carry. This is absurd and tantamount to confiscating the savings of hard working Germans.  Only going to add to the country’s already rising political tensions. As Holger notes, … Continue reading

Posted in Bonds, Germany, Interest Rates, Sovereign Debt, Uncategorized | Tagged , | 5 Comments

The Gathering Storm In The Treasury Market 2.0

Here it is, folks,  the final product. It is a beast.  One famous blogger said of it, “This post is so big, you can see it from space.” We hope you take the time to give it a thorough read.  … Continue reading

Posted in Bonds, Emerging Markets, Fiscal Policy, Inflation/Deflation, Interest Rates, Uncategorized | Tagged , , , | 43 Comments

The Gathering Storm In The Treasury Market

Summary Our analysis provides kind of a Grand Unified Theory (GUT) of what is currently taking place in global financial markets The massive borrowing by the U.S. Treasury is crowding out emerging markets capital flows The structural factors that have kept long-term … Continue reading

Posted in Black Swan Watch, Bonds, Budget Deficit, Capital Flows, Emerging Markets, Fiscal Policy, Interest Rates, Uncategorized | Tagged , , | 54 Comments

Long-Term Treasury: 4 Percent Or Bust

Great chart from Charlie B.   He asked 3.5 or 2.5 percent? We say beeline to 4 percent, when the rate breaks 3.13 percent, and quicker than the market believes. It’s been 10 years since Lehman,  nominal GDP is growing close … Continue reading

Posted in Black Swan Watch, Bonds, Interest Rates, Uncategorized | Tagged | 1 Comment

Charts That Count: QE QED

Since the collapse of Lehman Brothers the story of the world’s attempts to stop the financial crisis turning into a Great Depression has been dominated by central banks’ balance sheets. John Authers describes how this averted total disaster and sparked … Continue reading

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