Posts Tagged ‘monetary policy’

Notes From Underground: Yields Increase But Watch Out, Take Care, Beware

December 19, 2017

The long-end of the U.S. Treasury curve steepened Monday and Tuesday as bond futures did some technical damage, closing under the 200-day moving average. It joined the 2-, 5- and 10-year Treasuries, which have been below the important technical level since September. U.S.Treasury yields rose as the ECB failed to lift European sovereigns. The BUNDS, FRENCH OATS and Italian BTPs all saw significant increases in their yields. BUT I ADVISE PATIENCE AND CAUTION BECAUSE THE ECB IS SUPPOSEDLY SET TO FINISH ITS MONTHLY PURCHASES BY DECEMBER 21. As of the close of last Friday the ECB had bought ONLY 33 billion of assets leaving it 27 billion EUROS of its QE quota. It has two days in which to push yields lower and we don’t know how much they have purchased over the past two days.

(more…)

Notes From Underground: An Assessment of Market-Moving Events (Or, Which Narrative is Most Critical?)

November 5, 2017

Three central bank meetings, the selection of a new Fed chair, the release of a major new tax policy and the unemployment report provided the markets with great potential for increased volatility. Instead the markets yawned and carried equities to new all-time highs.The central bank decisions went as expected; the unemployment was a bit weaker than projected but the weather problems from the hurricanes have probably not been fully tallied.

(more…)

Notes From Underground: You Will Learn To Live With Volatility

June 11, 2015

Last Wednesday, ECB President Mario Draghi warned the traders and investors in sovereign debt and other credit markets that great volatility would be the cornerstone of activity and the market would have to learn to deal with it. The problem with this scenario is, I believe, that the ECB is the progenitor of most of the violent price movement. Remember, the ECB QE program means that the Frankfurt bank has a great deal of fire power to move markets–to the tune of 60 billion¬†euros ($72 billion) a month, which was close to what the FED was purchasing at the height of its QE program. Traders and investors have no heads-up as to when the ECB will be buying and therefore subject to being stopped out of trades at any time.

(more…)