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Browsing Category
Markets
Ukraine’s currency in free fall
Ukraine's financial situation continued to unravel today as the currency gave up another 10% - and seems to be in free fall.
RMB weakness accelerates and steady EMU inflation drive markets at month end
The two main drivers of the capital markets today have been the biggest one day loss in the Chinese yuan and new that the preliminary Eurozone February CPI did not tick down as many expected. The headline rate was unchanged at 0.8%, though…
No near-term currency regime change in China
Spot USD/CNY closed above the fix today for the first time since September 2012. Other factors are at work in China currently, making it even harder to read the true intentions of Chinese policymakers. All of these developments come against…
On the importance of the Fed’s reverse repo facility for safe asset collateral
Expectations of future shortages in quality liquid bonds in US debt markets continue to persist. These shortages however are likely to be more acute for short-term paper. As a percentage of total government debt for example, treasury bills…
Three reasons for the Russian ruble’s decline to record lows
The Russian economy is barely growing. The Russian central bank has no intention of supporting the ruble. We are also seeing some spillover from the Ukrainian mess.
The shrinking MBS market
The supply of mortgage-backed securities (MBS) continues to fall behind the potential demand - even with the Fed's taper in place. New issuance has steadily declined over the past year, with the Fed becoming an increasingly larger…
What do bank share prices tell us about growth?
Owning shares in a bank is the functional equivalent of owning a call option on the bank’s future operational earnings, and if the share price contains little intrinsic value (i.e. the value of its assets does not exceed the value of its…
Ukraine on the brink
Ukraine's sovereign CDS spread is approaching the high reached right before the Russian bailout was announced. The currency is nearing the pre-bail-out lows.
BoE Shatters Quiet Session
- The big event today is the BOE's Quarterly Inflation Report and the updated economic assessment and forward guidance; sterling is outperforming
- Carney indicated that the new forward guidance would look at a broader range of economic…
Challenging the Consensus
Now, when I look at financial markets going into 2014, I cannot recall ever having come across a more one-sided view than the one which prevails. The consensus view on bonds is overwhelmingly bearish while pretty much everyone is bullish on…