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’Those haircut-heavy credit claims [updated with more haircuts]
Update — apologies for a rather disorganised (and long) post… but we’ve finally gained information from all seven eurozone central banks who’ll accept additional credit claims under the ECB’s new rules…
Bank of England ups QE (and tweaks its gilts)
In the light of its most recent economic projections, the Committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus,
Global liquidity fail — the role of skewed incentives
Presenting, one of the best accounts of how the current crisis came about that we’ve read to date.
It comes courtesy of Benoît Cœuré, member of the executive board of the ECB, and should be required reading for every player in financial markets,
Tight money UK
Biggest monthly drop in M4 broad money since data began in 1982, biggest monthly drop in consumer credit since data began in 1993… (charts via the Bank of England)
It’s curious. This is technically a key yardstick for success in quantitative easing.
The LTRO rally is young, says SocGen
Or, taking the “three-year LTRO = QE” meme and running with it. Two charts via Societe Generale’s cross asset team on Monday:
Related links:
LTRO covers BNP, Credit Ag and SocGen 2012 funding –
Eye-catching ECB liquidity number du jour
Note this comes from Credit Suisse’s equity strategists… but we think this is a forecast worth passing on all the same:
The stigma of borrowing from the ECB appears to have been removed as signalled by ING and Rabobank’s willingness to use the facility.
Das transmission
Just to warm you up for Thursday’s European Central Bank policy meeting…
Though not many are expecting a rate change, Societe Generale’s Kit Juckes points out that the German two-year bond yield is close to going lower than Japan’s:
Decommissioning Dexia — a collateral story
(Aren’t all the best stories collateral stories nowadays?)
Cast your minds back to December. Borrowing from the ECB Marginal Lending Facility is ballooning past €5bn – and staying there for days on end – despite its penalty rate.
Privatkonto Frau Hildebrand
If you have a good grasp of German…
(Click image for document)
…You will be able to read the PwC report that the Swiss National Bank has just released at pixel time, in response to a Swiss media storm.
The cost of global central bank balance sheet expansion
From a speech by Jaime Caruana, the general manager of the Bank for International Settlements, given at the Bank of Thailand-BIS conference on December 12:
A stylised central bank balance sheet can be helpful in clarifying the various transmission channels (Table 1).
What the FOMC will (merely) discuss tomorrow
We’ll wait to see if Fedwire has any updates to his article from last week, but right now it seems likely that no major policy decisions will come out of tomorrow’s one-day meeting of the FOMC.
As our colleague Robin Harding points out,
Me like cheap dollars
A much bigger turn-out than usual from banks for the ECB’s latest operations to swap their euros for dollars:
RTRS-ECB ALLOWS 50.685 BLN DOLLARS IN 84-DAY OPERATION VS RTRS POLL $10 BILLION
RTRS-ECB
Collateral crunch, meet BoE
In light of the continuing exceptional stresses in financial markets, the Bank of England is today announcing the introduction of a new contingency liquidity facility, the Extended Collateral Term Repo (ECTR) Facility.
So much for that impact on currency basis swaps
Was Wednsday’s cordinated central bank intervention in currency swap markets all for nothing?
Currency basis swap markets certainly seem to think so.
As Citi’s CitiFX Wire notes on Wednesday London afternoon time:
One Eurobond to rule them all
In order to be effective, a central bank must act as a monopoly. It, just like Sauron, must control all. That’s the point.
All central banks thus routinely corner markets. If they didn’t, they would compromise their own position.
Central bankers: pursued by a bear
That is US and UK central bankers pursued by über bear Albert Edwards of Société Générale.
Edwards is rather peeved that researchers at the Federal Reserve seem to have concluded that the Fed wasn’t responsible for the housing boom that has turned into the biggest bust since the 1930s.
ECB cuts rates 25bps
Alternative headline: “faint glimmer ECB will not trash eurozone”
3 November 2011 – Monetary policy decisions
At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:
Understanding your central banker
If you can tell a little about someone from the books they read, you can tell a lot about them from the books they write, especially if they’re a central banker.
Morgan Stanley economist Spyros Andreopoulos has dipped into the library at the “Global Central Bank” and draws comfort from the number of “depression economics”
The trouble with central bankers…
Central banking and central bankers as we know them are out of touch with the modern world and ill-equipped to deal with the challenges set before them.
That is the view of Morgan Stanley’s Manoj Pradhan who argued that the current ‘DDD regime’,
Dollar funding — central banks intervene
*ECB ANNOUNCES DOLLAR LIQUIDITY MEASURES IN COOPERATION WITH FED
Full ECB statement:
The Governing Council of the European Central Bank (ECB) has decided, in coordination with the Federal Reserve, the Bank of England,
Beyond the QE2 adventure
While everything blows up… a blow-out speech by Adam Posen:
Make no mistake, the right thing to do right now is for the Bank of England and the other G7 central banks to engage in further monetary stimulus.
Sundry secret Greek liquidity [updated]
Update — See reader comment below. This may be a case of mistaken identity (or a Bank of Greece accounting change), not liquidity usage in July. We stand corrected if this is accounting changes. ELA’s not easy to spot!
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sun·dry
Adjective:
A mystery central bank in USTs?
FT Alphaville has already noted the extreme specialness of the current benchmark US Treasury 10-bond.
On Friday, however, that specialness reached new levels of extremity, with Bloomberg reporting repo rates of as low as minus 2.92 per cent.
The central bankers’ worry lists
Looks like there’ll be no sleep at Jackson Hole.
Courtesy of Morgan Stanley’s global economics team, two tables that list and rank each major central bank’s current “challenges”.
For the G10 (click to expand):
Inside Ireland’s secret liquidity
A tidy scoop from RTE, who’ve uncovered key Irish government documents setting up Emergency Liquidity Assistance to banks:
…Mostly.
But it’s largely all there, focused on the critical period leading up to and after Ireland’s bailout,
‘Collective amnesia’ on mortgage reform
German financial consultant Achim Dübel doesn’t mince his words.
Last week he spoke to a group of European politicians, including representatives from the UK, Spain and Germany, to talk mortgage reform.
Virtual money, from real central bank mistrust
What happens when you cross computer geeks with populist outrage at central banks?
Bitcoins happen.
New Scientist reports in its latest edition that a new virtual currency is harnessing peer-to-peer networking and high-tech computer-run algorithims to rival central-bank issued money.
Buiter bashes BoE accountability, and other central banks
Citigroup strategist and erstwhile FT blogger, Willem Buiter made headlines last week.
The former Monetary Policy Committee member, it was reported, took to the stand at a special hearing into ‘accountability at the Bank of England’ held by the UK Treasury Select Committee,
Bad juju in Irish bank buildings
We’re unsure if this is exorcism, omen, or what.
According to the Irish Times:
The central bank is considering moving from its iconic headquarters in Dame Street, Dublin, to a single large building in the Docklands area that would accommodate 1,500 staff…
The ‘Banks Under Restructuring’ programme
BURP, for short.
Oops. Excuse us. Manners.
Actually it looks like ‘Facility for Banks Under Restructuring’ is the working title for a European Central Bank plan to advance loans to Ireland’s banks — to replace their reliance on Emergency Liquidity Assistance from the national central bank.