Posts Tagged ‘U.S. yield curves’

Notes From Underground: Yield Curves Are Needles and Pins

August 7, 2017

I saw her today, I saw her face
It was the face I loved, and I knew
I had to run away
And get down on my knees and pray,that they go away
Still it begins
Needles and pins

These lyrics seem to describe the market’s relationship with Janet Yellen and her FOMC board. When I blog about yield curves it seems to elicit the greatest response as traders are trying to position themselves in a low-risk, high-reward trade. There was a question on last night’s POST from RLD concerning the 2/10 curve and the possibility of buying bank stocks, if my thesis about a steepening curve reaction to QT is correct. This is an interesting query and reflects on the intelligence of the readers of NOTES. The mainstream media reports on the relationship of yield curves and bank stocks in a regular fashion and theorizes that the correlation is high: Steeper curves beget higher bank revenues resulting in higher bank stocks.T he correlation is far from consistent as bank stocks were making highs in 2007 even as the curve dramatically flattened.


Notes From Underground: Algos React Where Global-Macro Traders Fear to Tread

October 8, 2015

It is time to end the SCAM of “journalists” receiving embargoed FOMC and data releases 60 minutes before the market so they can prepare their stories. In a financial world where volatility is measured in nanoseconds the SEC and CFTC are doing a major disservice to the world of CAPITAL FORMATION by letting the algo headline readers create nanosecond pandemonium through key-word reading algos. I would argue that some “journalists” write the headlines specifically for that purpose.


Notes From Underground: The Washington Redskins Should Change Its Name to the 37ers

September 20, 2015

Readers of NOTES FROM UNDERGROUND are aware that one of my major themes during the past six years has been Ben Bernanke’s pledge to Milton Friedman at MILT‘s 90th birthday. I’m paraphrasing, but Bernanke vowed the Fed would not make the mistakes of 1937 and raise rates in a period when fiscal policy was tight and monetary policy needed to be loose to sustain its velocity. In 1937 the combined policies of the FED and the Henry Morgenthau Treasury tightened together, which led to a renewed recession of the U.S. economy and a severe bout of renewed DEFLATION. It is the FED‘s and other central banks main thrust: To prevent a deflationary cycle taking hold. Bernanke is the ultimate 37er. For the FED, “whatever it takes” means inflation running hot so as to prevent any possibility of the LIQUIDATIONISTS and DEFLATION gaining a foothold in the economy.