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Tag Archives: Federal Reserve

Which Yield Curve “Inverts” First? US, Japan, Germany, or China?

How the “Yield Curves” Stack Up in central-bank manipulated bond markets. So we had a little bond-market upheaval this morning. After President Trump successfully manipulated bond yields down yesterday and today by griping about the Fed’s rate hikes, an inveterate Fed dove (who has also been griping about the Fed rate hikes) responded by brushing him off, and suddenly all kinds of things happened, with the 10-year yield jumping and the yield curve steepening a tad within minutes. St....

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“That’s a Super Dangerous Place to Be”: CEO of JPMorgan Asset Management

When central banks distort the markets, risk disappears from view. “You could have a bunch of walking-zombie companies and you don’t even know it,” explained Mary Callahan Erdoes, CEO of JPMorgan Asset Management, on Wednesday at the Delivering Alpha Conference in New York. “That’s a super dangerous place to be,” she said. She was talking about the effects of the ECB’s bond buying program as part of a broader warning that investors are no longer seeing risks. The ECB has been buying...

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Money Printing Does Not Do an Economy Good

When Nixon closed the gold window in August 1971, the US found itself in exactly the same economic circumstances as Britain had in September 1931 when she reneged on her gold standard obligations.  If Ben Bernanke’s theory on the Great Depression is correct – namely, that –  the United States should have received an enormous economic shot in the arm after finally freeing itself from its formerly golden fetters.So what has all the resulting money creation and credit expansion from the Fed’s...

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Russia Dumped Most/All its US Treasury Holdings, Disappeared from List

Who stepped up to the plate? It’s a good thing Russia never held as many US Treasury securities as China and Japan. The scenario would have been different. The “grand total” of US Treasury bonds, notes, and bills held by official foreign investors (central banks, governments, etc.) and non-official foreign investors rose by $44.6 billion to $6.17 trillion at the end of May, according to the Treasury Department’s TIC data released Tuesday afternoon. This is in the middle of the range of...

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“Yield-Curve Inversion” Consensus Rouses Contrarian in Me

Markets have a way of blowing this type of consensus out of the water. The phrase “yield curve inversion” may not be up there with “Taylor Swift” or “Kim Kardashian,” but it has by now cropped up in the media so often that people are Googling it all of a sudden: Markets are by now taking this “yield curve inversion” for granted. It’s going to happen, it’s just a matter of time, they say, and whether it’ll be next week or at the next rate hike is not crucial. This idea that the yield...

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As Risks Balloon, Yield Chasers Blow Off the Fed

“This emerging trend highlights just how much risk some investors are willing to take in the current environment.” The Fed’s explicit purpose of “removing accommodation” – hiking interest rates and unwinding QE – is to tighten the ultra-loose “financial conditions” that have prevailed for the past nine years. By tightening “financial conditions,” the Fed is trying to bring markets “gradually” – rather than all at once – back to earth: higher yields, wider spreads, higher risk premiums,...

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What Does the Student Loan Mess Tell Us About the Economy? SchiffGold Friday Gold Wrap 07.13.18

The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.Millions of Americans are struggling with student loan debt. In this episode of the Friday Gold Wrap, host Mike Maharrey explains how the student loan debacle is a microcosm of the broader economy. He also talks about some important news relating to the supply of gold and how we should think about...

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With this Inflation, What Will the Fed Do?

Even the last doves are coming around to more rate hikes. “In June, most of the rise in the index for final demand is attributable to a 0.4-percent advance in prices for final demand services,” said the Bureau of Labor Statistics in the release of its Producer Price Index data. The PPI and its numerous sub-indices measure inflation further up in the pipeline before it filters through to consumer prices. Services account for 65.3% (“relative importance”) of the PPI. Energy prices...

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Peter Schiff: Could the Trade War Prick the Bubble Economy?

There was a lot of trade war talk at the end of last week. In fact, on Friday, some pundits said the trade war officially began. Last Thursday, President Trump said the US may ultimately impose tariffs on more than a half-trillion dollars’ worth of Chinese goods, and a round of tariffs went into effect. The United States began collecting tariffs on $34 billion in Chinese goods. China implemented additional tariffs on some import products from the United States immediately after US tariffs...

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Update on the Fed’s QE Unwind

With QE, the Fed created money to buy securities and pump up asset prices; now it sheds securities to destroy this money. Here’s what the Fed’s QE unwind – or the balance sheet normalization, as it calls it – is all about: it reverses over an unknown span of years a large part of what QE had done over the span of five-and-a-half years. During QE, whose stated purpose was the “wealth effect,” the Fed amassed $3.4 trillion in Treasury securities and mortgage-backed securities (MBS). This...

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