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Browsing Category
Monetary System
Preparing for an L-shaped recovery – will we get a coordinated global response to the…
Markets in the US are poised for another day of heavy selling as the weekend approaches. And the worry has to be about having open positions over the weekend when any bad news would cause heavy selling pressure at market open on Monday. So,…
How the Fed aims to prevent the next financial crisis using the Standing Repo Facility
At first, I called this post "More on Quarles and the introduction of a standing repo facility". But that's not a sexy title is it? That's because repo isn't a sexy topic. I think it's important though. If we have a liquidity crisis though,…
A framework for thinking about tail risk
I woke up this morning to tweets from the amazing Lisa Abramowicz indicating a sizable move into risk-off territory for global markets on the back of coronavirus concerns. And because I talked about faulty market structure related to one of…
BBB fallen angels and fake ETF liquidity
Yesterday and today, there's been a bit of back and forth on Twitter about vulnerabilities in the high yield space. I thought I would weigh in via this newsletter because I think it's an important issue regarding faulty market structure.…
This jobs report is a game-changer regarding monetary policy. Here’s why
It's been a while since I had a public post on Credit Writedowns. So I thought now would be a good time to post given Wednesday's Fed rate decision and presser and today's jobs report. I think this one-two punch is a big deal. And that's…
The Fed’s overtightening and the shift to a fiscal paradigm
The Fed's discomfortFor the better part of 4 years, I have been telling you that the Federal Reserve has been uncomfortable with a mid-cycle role which required it to keep rates at zero percent. The Fed sees its role as principally reserved…
Policy divergence and the week’s monetary policy decisions
With the latest Fed and ECB rate policy decisions now behind us, we can start to assess what monetary policy means for the near-term future. I continue to be encouraged by near-term data flow in the US. Nothing in it reads recession.…
Watch for a re-emergence of the convergence to zero play
Understanding curve flattening
Long-time readers know that I have talked for a number of years about a longer-term global convergence to zero play that I see shaping up. It first emerged during the mid-cycle slowdown in 2015 and 2016 as…
The dollar liquidity squeeze and Germany’s weak real economy
Real quick here on Europe as I promised yesterday to add some thoughts on Germany after my trip to Cologne
US base rates are too high
Take a look at this chart from Bianco Research.
Jim Bianco describes this as showing the US having the…
The Fed overtightened. Now it’s behind the curve. Recession awaits
Sorry for the alarmist post title. But the Fed has completely bottled it. I've been warning for some time that it could go this way. And now, we are in in the endgame.
First, the Fed overtightened through 2018. Then, forced at gunpoint by…