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’We want negative Treasury yields
Interesting exchange in the latest minutes of the TBAC – Treasury Borrowing Advisory Committee, which brings together primary dealers and US Treasury officials… (Hat-tip Bondscoop)
The question was asked if it made sense for Treasury to permit bids and awards at negative interest rates in marketable Treasury bill auctions.
Banking off the FOMC
The obvious place to start when discussing the impact of Wednesday’s FOMC meeting on US banks is with the downward pressure on net interest margins that will result from the extended period of low rates.
Q&A: The Fed’s interest rate forecasts
The below is from the FT’s Money Supply blog that covers all things central banky.
So the Federal Reserve on Wednesday will publish forecasts which will show us how long it plans to keep rates at more-or-less zero.
Prepare the printing presses
And so it begins. The softening up exercise for another splurge of QE.
From the Bank of England’s depressing November inflation report.
First, growth (or lack of):
Output appears likely to be broadly flat in the final quarter of 2011.
Asian PMIs go ‘uh-oh’
There’s something for everyone in the Chinese PMIs for October:
BEIJING, Nov. 1 (Xinhua) — China’s Purchasing Managers’ Index (PMI) dropped to 50.4 percent in October after rising for two consecutive months,
No change at the ECB (inflation hawks win)
PRESS RELEASE 6 October 2011 - Monetary policy decisions.
At today’s meeting, which was held in Berlin, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1.50%,
Nomura: Trichet to deny Europe a fun going-away present
Or, why this letter is likely to make its way quickly into the recycling bin.
Just a couple of weeks ago, the conventional wisdom was still for a 50bps rate cut at Thursday’s ECB meeting — Jean-Claude Trichet’s last as ECB president — in light of rising expectations rise of an eurozone recession.
Masochism
On the bright side, at least the ECB left more room to cut rates?
Chart via Rebecca Wilder and it’s more than a bit tongue in cheek. Correlation isn’t causation either. Although considering the state of the German economy over the same period…
Eurobonds and the shadow of the future
Sometimes, you have to turn to US history to realise how very confused the eurozone is at the moment…
Merkel and Sarkozy want balanced member-state budgets in 2012, but no eurobonds for the foreseeable future.
Around the world, in leverage
So much focus on government debt lately — won’t somebody please think of the household leverage?
Morgan Stanley’s Global Monetary Analyst team has:
(And yes, Ireland has been classified as both Anglo Saxon and periphery).
When doves don’t cry – BoE edition
The minutes of the last MPC meeting are out and here’s the price action in the Great British Krona.
Something of a bounce, which is perhaps surprising because on first read the minutes appear to be fairly dovish.
Tranching up Europe’s interest rate rises
Ever pondered the big questions? The meaning of life? Are we alone in the universe? What will happen to European RMBS once interest rates start rising? We have.
And we have an answer — to the last one anyway.
About that Chinese inflation rate
With China hiking interest rates by 25 basis points on Wednesday, reportedly to counter faster inflation, now is probably a very good time to bring up the issue of the country’s GDP deflator calculation.
China hikes interest rates by 25bps
So here it is — the fifth Chinese rate hike since October last year.
As Reuters reported on Wednesday:
BEIJING, July 6 (Reuters) – China’s central bank increased interest rates for the third time this year on Wednesday,
‘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.
Nordea hunts down a Norwegian interest rate typo
Price action in the Norwegian krone on Tuesday:
Last week Norway’s central bank said it was holding interest rates at 2.25 per cent, but indicated through various data sheets and background material that an interest rate rise could come in either August or September.
What’s wrong with markets in seven easy slides
Hot on the heels of the BIS’s annual report — criticising how prolonged low interest rates can create ‘distortions’ and threaten ‘price stability’ — comes this presentation from Citigroup’s credit team.
The BIS still doesn’t like low interest rates
Those low interest rate u-Zirpers at the BIS are back.
The Bank for International Settlements, often known as the central banker’s bank, seems to share little in common with its low interest rate-advocating cousins in places like the UK and the US.
Foreign banks are arbitraging the Fed, RBC says
Up until April this year, US banks had a nice little earner.
As Freakonomics explained, big banks were able to borrow cash from the Fed funds or repo market for say, 15 basis points, posting US Treasuries as collateral,
Australia, flowing sideways
Notice anything in the below chart, of five-year CDS for Spain, Japan and Australia?
European shocks have managed to feed through into normally-quiet (CDS) markets like Japan’s (though of course,
Back to the future with UK RMBS
Your extend and pretend datapoint du jour, right here folks.
On Monday, Moody’s released a report advocating more disclosure of loan modifications within British Residential Mortgage-Backed Securities (RMBS). The UK’s Financial Services Authority already said something similar last month,
A tale of two UK inflations
Here’s something to throw the Bank of England’s will to withstand high UK inflation (and low interest rates) in surprising, sharp relief.
It’s a new finding by the Institute for Fiscal Studies, connected to a study of inflationary effects on low-income households over the long term:
Nomura says Spanish banks are funding 24 years worth of housing
During the Spanish boom of 2004-2008 the country started construction of about 3.26m new houses, according to Nomura’s figures, and sold about 2.86m in the Costa Brava beach house craze.
By the end of 2009,
Taking the eurozone’s housing temperature
Some graphics from Danske Bank to ponder ahead of the ECB’s Thursday meeting:
Related link:
S&P sees eurozone, UK housing headwinds on swelling rates - FT Alphaville
This is really not normal ECB tightening
There’s the effect of rising European Central Bank rates on households in the periphery, and there’s the effect of two-tiered rate markets on periphery banks:
And quite often –as in these charts by Goldman analyst Dirk Schumacher– the two effects meet.
Bagehot, bailouts and banks – the entwining continues
It’s a moonless night in October, 2008.
A hooded figure turns the corner of Threadneedle Street. It’s Fred Goodwin, head man of the languishing British bank, RBS. He glances behind him. No one’s there.
‘Monitor very closely’
Code word time again. Trichet at Thursday’s ECB rates decision (held, at 1.25 per cent) presser:
With interest rates across the entire maturity spectrum remaining low and the monetary policy stance still accommodative,
S&P sees eurozone, UK housing headwinds on swelling rates
Here’s a convenient continuation of the rising-European-rates-meets-real-estate theme.
Standard & Poor’s reckon “fresh headwinds are gaining force in Europe’s real estate markets” due to rising interest rates (or at least,
Choose your own MBS accounting
Basel III. Accounting. Mortgage-Backed Securities. Yawn.
But wait — Basel III’s attempt to incentivise banks into managing their interest rate risk could be about to permanently alter the way banks handle some $1,480bn worth of MBS,