Posts Tagged ‘U.S. Dollar’

Notes From Underground: From Tweets to Tweaks

June 20, 2021

Happy father’s day to all who are one and have had one. Just nine months ago the markets were experiencing convulsions as the then-U.S. president would unleash tweet after tweet at all hours. We certainly don’t miss the key-word-driven algos creating volatility with the tip of their finger. The markets got a jolt last Wednesday when the Fed tweaked its administered rates — interest on excess reserves and the offering yield on its reverse repo facility — by 5 basis points in an effort to prevent short-term rates such as TREASURY BILLS from pushing into negative territory on a SUSTAINED basis as cash continues to flood the market, a consequence of the central bank’s ongoing QE ($120 billion a month). Adding to the deluge is the U.S. TREASURY, which has been running down its cash balance from an all-time high of $1.8 trillion.

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Notes From Underground: Sanctions Are Sanctimonious

May 2, 2021

In today’s world of DOLLAR domination it is easy for the U.S. Treasury — under the guidance of the president — to place sanctions on many different global actors as they strive to use the conduit of SWIFT and other banking facilities to move money around the globe. The U.S. likes to beat its chest and proclaim that it is operating in a rules-based system and therefore sanctions are an appropriate tool in response to the malevolent actions of autocratic-oriented nationalistic actors. But whose rules? And the invocation of sanctions leads to those subject to the whims of U.S. policy to find ways to operate in international grey areas of commerce.

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Notes From Underground: Bonds Talking Trash To the Central Banks

February 28, 2021

Last week the world’s bond markets experienced an assault propagated by the MISERABLE U.S. five-year Treasury note auction on Wednesday followed by a more dismal seven-year sale on Thursday. Also, the Australian and KIWI 10-year notes suffered massive bouts of volatility even as the RBA and RBNZ intervened with more QE to stem the rise on the long end. We at Notes From Underground have warned that the markets were attacking the FORWARD GUIDANCE motivations of the world’s monetary authorities by attacking the long end of the yield curve as the area of least resistance because central bank asset purchases around the world have been targeted at debt instruments of much shorter duration.

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Notes From Underground: Was It the Fool On the Hill?

February 23, 2021

On Tuesday, Federal Reserve Chairman Jerome Powell testified before the Senate Finance Committee in the semi-annual Humphrey-Hawkins Testimony and Report to Congress, in which the Fed has to answer as to how the U.S. economy is performing in relation to its dual mandate. Senator Sherrod Brown, the chair of the finance committee, is very knowledgeable and in similar fashion provided strong leadership but unfortunately he cannot censor stupid questions as politicians use the microphone for political posturing. There were many types of “when did you stop beating your wife” questions as if the Senators wished to trap Powell instead of an honest assessment.

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Notes From Underground: Extra! Extra! Read All About It

February 11, 2021

On Wednesday, FEDERAL RESERVE Chairman Jerome Powell emphasized, yet again, that he and the FOMC believe UNEMPLOYMENT in real terms using its broad measure is about 10%. The recent release of labor statistics revealed a 6.3% unemployment rate but Powell stressed in his Q&A at Economic Club of New York that “the statistic doesn’t capture the full extent of labor market slack.” Bloomberg’s Craig Torres finally gave credence to the idea that Jerome Powell is focused on ending the present disparity between minority and white employment as Powell used FED data to clarify the black unemployment rate was 9.2% versus 5.7%.

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Notes From Underground: At the Fed, Jobs is Priority Number One

February 7, 2021

There was another round of somewhat positive unemployment data on Friday. The U.S. release was tepid but juxtaposed with the Canada data it would seem robust. The Canadian jobs number was dismal on its face as 213,000 jobs were lost and the unemployment rate jumped to 9.4% from 8.6%, although a slight increase was expected (around 8.9%). The U.S. unemployment rate dropped to 6.3% from 6.7% with a slight gain in nonfarm payroll of 49,000, although much of that was in public sector employment. Average hourly earnings rose 0.2% but of greater interest was the increase in average hours worked, which reached a highest in history according to the Liscio report at 35 hours.

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Notes From Underground: What Constitutes Market Forces?

February 2, 2021

This is a question that plagues NOTES FROM UNDERGROUND, where we believe 2+2=5 is a beautiful thing. The objective force created by markets has always perplexed us? U.S. Treasury Secretary Janet Yellen keeps sounding the alarm that currency values must be established by markets. This is meant to be a threat to nations that attempt to intervene through selling their currencies in the open markets in an effort to keep downward pressure on currency values to support their economies.

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Notes From Underground: Central Bank Poker

January 21, 2021

This week, three G-7 central banks had meetings and all decided to CHECK and leave policy unchanged. This was widely expected as there was little reason to UPSET the incoming Biden administration with any idea of currency manipulation. However, the Bank of Canada, Bank of Japan and European Central Bank all discussed the fear of a further slowdown from an increased spread of covid-19.

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Notes From Underground: The Sun Will Come Out Tomorrow

January 19, 2021

Say goodbye to Daddy Warbucks Say hello to Uncle Joe.

On Monday we got a preview of the Biden Administration as Treasury Secretary nominee Janet Yellen appeared before the Senate Finance Committee. It was sad that her testimony was released over the weekend. There were the stock answers to the issue of the U.S. dollar, which falls under the auspices of the Treasury Department. Yellen proclaimed that the markets would set the value of the DOLLAR and that it would not be the policy of the Biden Administration to manipulate the currency to attain some illusionary trade advantage.

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Notes From Underground: Thursday In the Park With Louis Gave

January 10, 2021

I had the pleasure of sitting down with Louis Gave last week and we discussed many of the pressing issues facing the global macro world. In May 2020, Richard Bonugli provided the FRA platform as a place to discuss the global outlook with a little bit of FORESIGHT. We HIT IT OUT OF THE PARK. Hopefully, our most recent analysis will provide similar investment outcomes and maybe succeed in clarifying some important issues facing the investment community as 2021 begins.

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