Posts Tagged ‘central bank balance sheets’

Notes From Underground: A Podcast With Top Step Trader

November 21, 2017

During this thin holiday market as markets, it’s important to remind ourselves of the tools that are necessary to have in order to profit in the global financial markets. I had the pleasure to sit down with Eddie to reprise many stories that bring laughter but also knowledge of the markets. Please enjoy the podcast.

As far as Tuesday goes, the equity rally powers on and the yield curves continue to flatten, causing angst among many asset managers. But as the U.S. curves flatten the European curves are actually steepening, which is in contravention to conventional wisdom. The ECB is still building its balance sheet while the FED has actually begun shrinking its $4.5 trillion accumulated asset base. The U.S. curve OUGHT to be steepening while the European should be flattening. My opinion is that the emphasis is on buying the short end of Europe but forcing global investors to seek duration risk in the U.S. with its higher sovereign yields. Just last week, the European junk bond market was actually yielding less than U.S. 10-year Treasuries. I can’t stress it enough: The international market for pricing risk has been terribly distorted by the central banks. This is the environment we exist in for the business we have chosen. I will be on with Rick Santelli on Wednesday at 9:40am CST. Enjoy your Thanksgiving for anyone reading this BLOG has much to be thankful for. All the best, Yra