Demographic Obstacles to Increasing Yields
The ground is littered with dead bodies of investors/traders who have bet on rising US rates/yields. Is this time different? Why is this trade so difficult? It is my very humble opinion that when the history books are written about this time in financial history,…
Why The Unwind Of The Carry Trade Is Increasing Volatility
Central bank interest rates are of fundamental importance to exchange rates and foreign exchange flows as they determine the direction and profitability of carry trades. When the interest rate differential between two central banks is positive, it is generally possible to borrow a currency at…
World War C: Illiquidity is CRUSHING Corporate Debt Markets
Cumulatively the markets are at or near record highs in illiquidity. What makes this collapse so devastating is the breadth of illiquidity across most sectors of the market. The Volcker rules that were passed in 2009 to protect banks had unintended consequences. Banks stopped making markets in…
World War C Continues: Quick Update On The Fed’s Battle Lines
The long end of the yield curve, as measured by the TLT ETF, experienced a -9.8% intraday peak-to-valley drawdown on Wednesday. The TLT finally bottomed at 2:40 est. This was the exact time of the Fed’s last auction where it began purchasing 30-year US Treasuries. This auction was unscheduled…