Posts Tagged ‘negative rates’
October 16, 2017
As the tinder of prairie fires builds, these areas of concern are important because of the potential impact they can have on the market:
1. Sunday’s election results in Austria give rise to concerns about the rise of euroskeptic groups in several European nations. Yes, the anti-immigration sentiment appears to be the dominant variable in bringing a right-wing government to Vienna, but the sparks from xenophobia can manifest into an anti-ECB issue as domestic citizens are asked to foot the bill for bail-outs of Italian banks. Many citizens of various European states have borne the costs of bailing out Italy, Spain, Ireland, Greece and Cyprus through negative interest rates, the ultimate tool of financial repression. German two-year notes are currently -73 basis points, even though German inflation is approaching 1.7%, resulting in a real yield of NEGATIVE 2.5% for the savers in German-based banks. Regardless of what the ECB does in terms of quantitative tightening President Draghi has maintained that negative rates will remain lower for longer. Financial repression will be the next theme for the European right.
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Tags:Austrian elections, BIS, Claudio Borio, ECB, Fed, Janet Yellen, John Taylor, Kevin Warsh, Mario Draghi, negative rates, President Trump
Posted in ECB, Europe, Fed | 11 Comments »
February 6, 2017
Notes From Underground has been concerned that 2017 would be the year of Europe as the ECB’s quantitative easing policy and NEGATIVE interest rates would be an issue for many of the elections taking place this year. The Dutch, French and Germans will hold parliamentary elections. Those following the mass media will be focusing on immigration while NFU will continually seek to underline the importance of the repressive financial policies of the ECB. It is this narrative we will use to take the pulse of potential upheavals to the status quo. There is no doubt that the opposition to President Draghi is growing. In a threat to the Empress of Europe, Angela Merkel, received news that her coalition partner, SPD, has overtaken her party in the polls.
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Tags:DAX, ECB, French oats, Mario Draghi, negative rates, QE, Wolfgang Schauble
Posted in Debt Market, ECB, Europe, Germany | 1 Comment »
March 17, 2016
Lies, lies, you’re tellin’ me that you’ll be true
Lies lies
That’s all I ever hear from you
Tears, Tears
I shed a million tears for you
Tears tears
And now you’re lovin’ someone new
Someday I am gonna be happy
But I don’t when just now
Lies, lies
A-breakin’ my heart
You think you are such a smart girl
And I’ll believe what you say
But who do you think you are girl?
To lead me on this way, hey!
Lies, lies
This song can be applied to so many policy makers: Draghi, Lagarde, Kuroda and, of course, Yellen. This week has brought interest rate policies from five central banks and the biggest impact was from the Fed as the market believes that the “dot plot” has thickened since the projections for “four is still in the park” has certainly left the rate increases stranded at SECOND. Today, three banks announced policy decisions. The Swiss National Bank left policy unchanged but noted it believed that the global economy was soft and as usual the Swiss franc was overvalued. The SNB reserves the privilege of intervening to weaken the FRANC whenever it deems it appropriate. The recent strength of the EURO and the stability of the EUR/CHF cross should keep the Swiss quiet but vigilant.
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Tags:BOE, Fed, negative rates, Norges Bank, QE, SNB
Posted in Central Banks | 13 Comments »
January 31, 2016
Here we go again. Bank of Japan Governor Kuroda “shocked and awed” the markets by taking BOJ deposit rates into negative territory in a HYBRID sort of way as it is a three-tiered methodology that does not apply to money already being held at the BOJ in reserve. Also, money that is deemed regulatory-type capital will receive ZERO interest and won’t be punished with a surcharge, but any new funds making it onto the reserve balance sheet of the BOJ will receive NEGATIVE INTEREST RATES. Kuroda-san delivered this shock after promising last week that the BOJ would not go negative on its deposit rate. Kuroda will learn hat if you keep intentionally pumping the markets with disinformation the markets will have their time when the BOJ needs it the most, like maybe selling off the massive JGB portfolio on its balance sheet. But through the power of negative compounding of interest earnings Kuroda has brought Stevie “Guitar” Miller’s words to life:
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Tags:BOJ, China, Fed, Gold, JGBs, Kuroda, negative rates, Yen, Yuan
Posted in BoJ, Currency, Gold, PBoC | 21 Comments »
February 3, 2015
Today, the trial of former IMF Director Dominique Strauss-Kahn [DSK] began in Paris. The former IMF director is charged with “aggravated pimping in an organized group.” Well, if DSK is on trial for aggravated pimping, it seems that St.Louis Fed President James Bullard OUGHT to be indicted on a similar charge.
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Tags:currency pegs, Danish Central Bank, Dominique Strauss-Kahn, ECB, Euro, Fed, James Bullard, kroner, negative rates, QE, SPS, Swiss Franc
Posted in Central Banks, Currency, Danish Central Bank | 4 Comments »
January 19, 2015
Today it was the Danish Central Bank that lowered its interest rates in order to prevent the markets from trying to break the Danish KRONER/EURO peg and lowered the overnight rate to NEGATIVE 0.20% from a NEGATIVE 0.005%. It was unusual that the Danish Bank lowered the rate on a Monday rather than the usual Thursday but some analysts of the Nordic banking system believe the Danes may act again this Thursday after the ECB reveals its QE program. NEGATIVE RATES ARE THE NEW NORMAL! Danish banking authorities maintain that the Danes are not under as much stress as the Swiss were because the reserves at the DCB are 13% below the peak of 2012, the height of the EU financial crisis.
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Tags:Angela Merkel, ECB, Jens Weidmann, Kroner/Euro peg, Mario Draghi, negative rates, QE, SNB, Swiss Franc, Thomas Jordan
Posted in ECB, Europe, SNB, Switzerland | 9 Comments »
September 10, 2014
After the newest moves by the wily fox Mario Draghi last Thursday, NOTES raised the issue of what the Swiss National Bank would do in response to the negative vibes emanating from the guardians of the EURO currency. The SNB has supported the EUR/CHF cross at a floor of 1.20 to “prevent” the Swiss economy from slipping into a deflationary spiral. The SNB has accumulated a massive foreign exchange portfolio as it has bought hundreds of billions of euros to ensure the floor holds on the. The massive buying of euros has been somewhat successful as 1.20 holds but the market still puts pressure on the Swiss as the cross is trading between 1.2050 and 1.2100. All that buying and the CROSS is a mere 0.8% off the floor.
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Tags:BOJ, EUR/CHF, JGBs, liquidity trap, negative rates, QE, SNB, Yen
Posted in BoJ, Currency, SNB | 7 Comments »
April 22, 2014
If my radar is right, the coming European Central Bank QE program will be a concoction of asset-backed securities in an effort to remove non-performing loans from bank balance sheets. There have been a multitude of “conjectures” about how the ECB is going to pump liquidity into a very low growth economy. Previously it seemed that some at the ECB wished to install negative yields on bank reserves. This would be an experiment fraught with danger as it could cause great problems for the money funds that have recently returned to Europe. The problem for money market funds was epitomized in a statement from Bank of New York Mellon’s CFO Todd Gibbons after today’s earnings release and reported in tomorrow’s Financial Times:”If the eurozone were to go to negative rates that would actually present the opportunity for us to charge for deposits and we are giving that very serious consideration.” The idea of “negative interest rates on reserves” has been bandied about as some members of the ECB board have tried to stem the euro currency’s recent strength. It has been surmised that charging banks for parking excess reserves at the ECB would force European banks to reverse course and put the funds out to lending rather than having to pay a fee for the safety of the ECB.
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Tags:ABS, asset-backed securities, BONY, ECB, Euro, Europe, Jacques de Larosiere, Kiwi, Mario Draghi, money market funds, negative rates, New Zealand dollar, QE, RBNZ
Posted in Debt Market, ECB, Europe, RBNZ | 9 Comments »
