It was a fortuitous day that Richard Bonugli arranged a podcast with Joseph Wang, author of the Fed Guy and an former employee of the New York Fed’s System Open Market Account (SOMA). The podcast was recorded 90 minutes after the release of Tuesday’s CPI data so there was much to discuss in real time about FED policy, the recent moves in the SPOOs, dollar, commodities and precious metals were all reversed because the MARKETS seemed to have been caught off guard by a much higher number than Wall Street pundits anticipated.
Posts Tagged ‘Fed Funds Rate’
Notes From Underground: Another Day, Another Podcast
September 14, 2022Notes From Underground: A European Discussion With Professor Polleit
May 3, 2022Yes, Wednesday is FED day and the markets are expecting a 50 basis point increase in the FED FUNDS RATE to a range of 0.75% to 1%. The most important issue will be the size of the balance sheet unwind and whether Chair Jerome Powell is good to his heightened concerns about headline inflation means a full throttle on balance sheet shrinkage, reaching the full $95 billion a month at a quick pace. So Jerome, let’s have at it and let the markets decide the impact on myriad asset classes. In 2018, this double shotgun of QT and interest rate hikes proved too much for the highly leveraged global markets. Now that the Fed’s balance sheet is twice as large let’s see how it will affect the leverage in the global system.
Notes From Underground: The Sounds Of Silence, as Sung by Hyman Minsky
October 28, 2019Equity markets on Monday sustained their global rally as markets across Asia, Europe and the United States powered higher, even as the political backdrop continues to foment greater uncertainty. This week brings three key central bank meetings: The Bank of Canada, the Federal Reserve and the Bank of Japan. (more…)
Notes From Underground: Should We Fear the Repo Man?
September 17, 2019Just as Saudi Arabia was becoming less of a story the NEW YORK FED‘s mishandling of Tuesday’s repo operation has created a new round of angst for traders if not investors. The best coverage on the FED‘s recent efforts to calm the overnight funding markets (and repo turmoil) has been done by Liz Capo McCormick and Alex Harris at Bloomberg News. Now they have another article out discussing another REPO operation tomorrow morning.
Tuesday’s operation injected $53 billion of liquidity, even though $75 billion was on offer. While the FUNDS level went as high as 10% today the repo operation brought the level down to 2.50% to 2.25%, calming fears of any type of solvency/liquidity situation. Even though we’re around the 11th anniversary of the Lehman Brothers collapse, It has been a decade since the markets had to be truly focused on the FUNDING markets so many people are left with more questions than answers.
Notes From Underground: Who Fears the Repo Market?
September 11, 2013Is the repo market more important than the Fed’s tapering? According to Manmohan Singh and his paper, “Collateral and Monetary Policy,” an IMF Working Paper, it seems that the Fed’s efforts to pare down its vast balance sheet will be much more significant for the markets. This work by Singh is critical to dealing with the issue of money and its velocity, or the lack of velocity of money that has kept the inflation rate down (despite all the predictions of rampant price increase due to the huge liquidity creation by the FED). The FED‘s vast $3.5 trillion balance sheet has kept high-grade collateral from providing the lubrication to the credit/repo markets.
Notes From Underground: It is May Day and the Markets are Truly International
May 1, 2011Elections are tomorrow in Canada. The polls are tight as the surprise is coming from the gains in the polls for the New Democratic Party (NDP), a party led by Jack Layton and is further left than the Liberal party that moved to start the NO-CONFIDENCE VOTE, which forced the early election. It seems that the TORIES will hold their numbers but the desire by Prime Minister Harper to become an outright majority party will not be realized. The political situation in Canada can become very confused as the LIBERALS/NDP may be able to forge a government if the most current polls are accurate. The markets have paid little attention to the polls as the Canadian Dollar closed the week and month out almost on its recent highs–another statement about the U.S. DOLLAR.