“Deflation” is a word that we will be hearing a lot over the next year or two. This is because most of the major economies such as the US, Europe and Japan, are currently experiencing very low or negative changes in their price levels. Nearly every central banker and finance minister spits the word “deflation” […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-11-26 04:47:262018-05-21 04:47:58The Deflation Battle is the Central Bankers’ Last Stand
My last blog entry sparked some interesting comments about the role of Sovereign investors in the US Treasury market. It is well known from Price Theory that market clearing prices are determined by the marginal demanders and suppliers for that good or security. But just who are these people? In most cases, they are faceless […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-11-01 04:48:062018-05-21 04:48:36Meet Mr Lee and Mr Smith, the Marginal Investors in the US Treasury Market
Last week witnessed the “capitulation trade” from the myriad of short sellers in the global interest rate markets. The shorts were predominantly hedge funds and professional investors who have been betting that interest rates will rise in the US for the best part of five years. “Capitulation” occurs when these investors can no longer bear […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-10-20 04:49:142018-05-21 04:49:45The Unsung Winners in the Bond Markets Are Not ‘Taking Profits’
Bill Gross’ departure from PIMCO rattled the bond markets for three or four days on the expectation that redemptions from his famous Total Return Fund would put upward pressure on interest rates and negatively impact corporate bonds. It’s a credit to Bill’s stature that one man can influence an extraordinarily large and deep market. No […]
Last Friday, Standard and Poor’s announced that they were removing India from negative watch, in turn affirming that country’s BBB- sovereign rating. This unexpected announcement immediately caused the Indian Rupee to jump 0.5% on the basis that India’s bond market will attract capital inflows now that the country remains investment grade. The disappointing aspect of […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-09-29 04:52:322018-05-21 04:52:59S&P Still Matters in Indian Bond and Currency Markets, Despite Everything…
Reinsurance premiums have collapsed, according to reports from the annual meetings of reinsurers and brokers in Monte Carlo over the weekend. Bloomberg reports that this is due to “…the absence of costly disasters and increasing competition from new entrants…”, but both these reasons strike me as suspect… For one thing, no self-respecting risk manager would […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-09-16 04:53:032018-05-21 04:53:49You Know the Market is Hot When Reinsurance Markets Collapse
“We’ve had six or seven years of this and we still have a weak recovery. So you have to ask ‘is this the answer?’” Such are the words of the Governor of the Reserve Bank of India, Mr Rajan, commenting on the effectiveness of Quantitative Easing. Before taking the reins at the RBI last year, […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-09-08 04:53:532018-05-21 04:54:28The RBI’s Mr Rajan Dares to Challenge the QE Status Quo…But Is It Too Late?
Who would have thought that the success of a Central Banker would be judged by his or her ability to debase their own currency? Ben Bernanke, Mervyn King and a procession of Japanese governors have all tried and failed to undermine their own currencies’ value. Can Mario Draghi succeed where his fellow policymakers have failed? […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-08-28 04:54:302018-05-21 04:54:58Can Draghi Win the ‘Race To Debase’?
I am not sure if the logic in this blogpost is correct as I haven’t completely thought it through. But I think it is correct. I have argued several times in previous posts that the Federal Reserve’s QE initiatives failed because velocity collapsed. While the QE policies expanded the monetary base, the additional liquidity was […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-08-25 04:55:002018-05-21 04:55:34The Fed Makes Liquidity Management More Difficult as it Decides to Court Money Market Funds
With US Treasury 10 year yields at 2.49%, the likelihood that they will close the year in line with the bearish 3% consensus view is looking more and more remote. How much longer can the bears hold out? There are only five months left in 2014, and the five month implied volatility for 10yr Treasuries […]
http://www.firstdegree.asia/wp-content/uploads/2018/04/logo.png00Timhttp://www.firstdegree.asia/wp-content/uploads/2018/04/logo.pngTim2014-07-29 05:08:392018-05-21 05:09:27Time is Running Out For the Bond Bears
The Deflation Battle is the Central Bankers’ Last Stand
“Deflation” is a word that we will be hearing a lot over the next year or two. This is because most of the major economies such as the US, Europe and Japan, are currently experiencing very low or negative changes in their price levels. Nearly every central banker and finance minister spits the word “deflation” […]
Meet Mr Lee and Mr Smith, the Marginal Investors in the US Treasury Market
My last blog entry sparked some interesting comments about the role of Sovereign investors in the US Treasury market. It is well known from Price Theory that market clearing prices are determined by the marginal demanders and suppliers for that good or security. But just who are these people? In most cases, they are faceless […]
The Unsung Winners in the Bond Markets Are Not ‘Taking Profits’
Last week witnessed the “capitulation trade” from the myriad of short sellers in the global interest rate markets. The shorts were predominantly hedge funds and professional investors who have been betting that interest rates will rise in the US for the best part of five years. “Capitulation” occurs when these investors can no longer bear […]
The Bill Gross Trade
Bill Gross’ departure from PIMCO rattled the bond markets for three or four days on the expectation that redemptions from his famous Total Return Fund would put upward pressure on interest rates and negatively impact corporate bonds. It’s a credit to Bill’s stature that one man can influence an extraordinarily large and deep market. No […]
S&P Still Matters in Indian Bond and Currency Markets, Despite Everything…
Last Friday, Standard and Poor’s announced that they were removing India from negative watch, in turn affirming that country’s BBB- sovereign rating. This unexpected announcement immediately caused the Indian Rupee to jump 0.5% on the basis that India’s bond market will attract capital inflows now that the country remains investment grade. The disappointing aspect of […]
You Know the Market is Hot When Reinsurance Markets Collapse
Reinsurance premiums have collapsed, according to reports from the annual meetings of reinsurers and brokers in Monte Carlo over the weekend. Bloomberg reports that this is due to “…the absence of costly disasters and increasing competition from new entrants…”, but both these reasons strike me as suspect… For one thing, no self-respecting risk manager would […]
The RBI’s Mr Rajan Dares to Challenge the QE Status Quo…But Is It Too Late?
“We’ve had six or seven years of this and we still have a weak recovery. So you have to ask ‘is this the answer?’” Such are the words of the Governor of the Reserve Bank of India, Mr Rajan, commenting on the effectiveness of Quantitative Easing. Before taking the reins at the RBI last year, […]
Can Draghi Win the ‘Race To Debase’?
Who would have thought that the success of a Central Banker would be judged by his or her ability to debase their own currency? Ben Bernanke, Mervyn King and a procession of Japanese governors have all tried and failed to undermine their own currencies’ value. Can Mario Draghi succeed where his fellow policymakers have failed? […]
The Fed Makes Liquidity Management More Difficult as it Decides to Court Money Market Funds
I am not sure if the logic in this blogpost is correct as I haven’t completely thought it through. But I think it is correct. I have argued several times in previous posts that the Federal Reserve’s QE initiatives failed because velocity collapsed. While the QE policies expanded the monetary base, the additional liquidity was […]
Time is Running Out For the Bond Bears
With US Treasury 10 year yields at 2.49%, the likelihood that they will close the year in line with the bearish 3% consensus view is looking more and more remote. How much longer can the bears hold out? There are only five months left in 2014, and the five month implied volatility for 10yr Treasuries […]