liquidity

Themes for today: The US faces political constraints in a cyclical downturn that will limit government response The US private surplus is under assault Europe is improving and upgrades to bank stocks are bullish The Fed tends to…

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…

there is much discussion of formally ending attempts to sterilize the SMP sovereign bond purchases conducted under ECB President Trichet. While refraining from sterilizing the SMP purchases would boost excess liquidity, we suspect it would…

It may be something symbolic such as a small rate cut or possibly a more substantial move such as a new LTRO program, but the European Central Bank will be forced to loosen monetary policy in the near future.

The ECB's dovish forward guidance is clear and does not lack the doubts seen in the UK, or to a less extent, the US. However, in an usual occurrence overnight rates (EONIA) has moved above the refi rate (25 bp), when it should be trading…

Given its importance, here are some facts about the interbank lending market in the US.

This lack of credit expansion is a dangerous trend that could result in years of Japan-style stagnation. In order to address it, one approach the ECB is contemplating is forcing the banking system to use the new LTRO proceeds to provide…

Below is a speech by Philadelphia Federal Reserve President Charles Plosser recommended a more circumscribed role for the Fed.

Below is the full text of a speech by Federal Reserve Governor Daniel Tarullo on regulation of non-bank financial institutions.

Below is the text of a speech delivered on Friday by Federal Reserve Chairman Ben Bernanke on the recent financial crisis and its similarities to financial panics like the Panic of 1907 (which led to the founding of the Federal Reserve in…