Borrowing Costs

Tyler Durden's picture

US Manufacturing "Remains In Low Gear" - Hovers Near One-Year Lows





Having fallen 4 months in a row in December to its lowest since last January, one could have been forgiuven for expecting the ubiquitous hope-driven bounce we so often see in soft-survey-based data and sure enough, Markit's US Manufacturing PMI eked out a very small (53.9 vs 53.7 previous) rise in January - hovering at practically one-year lows. On the heels of China's disappointment, it appears the cleanest dirty short of America is not decoupling too much (if at all). This is not the "crisis has passed", "economy is strong" narrative-confirming data that Obama and The Fed would have everyone believe and as markit notes, “Manufacturing remains in a lower gear compared to that seen last summer... adding to the suspicion that the pace of economic expansion in the first quarter could even fall below the 2.6% rate seen in the final quarter of last year."

 
Tyler Durden's picture

Frontrunning: February 2





  • Germany Sees No Need to Scrap Troika in Overseeing Greek Turnaround (WSJ)
  • European markets subdued as Chinese data weighs (Reuters)
  • U.S. Oil Workers Strike Enters Second Day as Crude Prices Slide (BBG)
  • Oil prices rally above $55 as investors pile in (Reuters)
  • Obama Wants a New Tax on U.S. Companies' Overseas Profits (BBG)
  • If Trading Bonds Is Hard, Think About Pain When Rates Rise (BBG)
  • Julius Baer Braces for Swiss Franc Impact (WSJ)
  • Coke, Budweiser win as Super Bowl ad battle gets serious (Reuters)
 
Tyler Durden's picture

Denmark Launches "Back-Door QE", Halts Treasury Issuance: Why DKKEUR Could Be The "Trade Of 2015"





What Denmark has just done is "back-door QE", because as some forget, there are two ways to push the price of an asset higher (thus pushing its yield lower in the case of a bond): increase demand, which is what conventional QE does when central banks buy bonds, or reduce supply. Which is what Denmark just did by completely cutting off all Treasury issuance "until further notice". As a result, paradoxically, increasingly more speculators are betting that the "Trade of 2015" could be doing precisely the opposite of what the Danish central bank is hoping will happen: i.e., shorting the EURDKK (or going long the DKKEUR) in hopes that when the Danish peg finally does break, it too will result in long Swiss France-type profits.

 
EconMatters's picture

The German 10 Year Bund Effectively a Call Option at 30 Basis Points





At 30 basis points yield, a short on this German Bund via the futures market is basically a call option on the utter destruction of this Massive Yield Chasing Strategy on behalf of financial institutions...

 
EconMatters's picture

The Bond Market Has Reached Tulip Bubble Proportions





The Tulip Lunacy in the Bond market is just off the charts stupidity at its finest!  The U.S. 2-Year Bond is currently pricing in no rate hike, and in fact, a negative rate of inflation over the next two years.... 

 
Tyler Durden's picture

Frontrunning: January 29





  • Who Doubts Yellen's Policies? Summers for One (BBG)
  • Samsung, Apple Back in Dead Heat for Global Smartphone Dominance (WSJ)
  • Islamic State purportedly sets new deadline for hostage swap (Reuters)
  • Turkey's $7.9 Billion Mystery Money That's Simply Vanished (BBG)
  • How a Two-Tier Economy Is Reshaping the U.S. Marketplace (WSJ)
  • U.S. Prisons Grapple With Aging Population (WSJ)
  • Hasenstab Sees $3 Billion Vanish in Ukraine as One Big Bet Sours (BBG) - maybe he should BTFD, pardon, "invest" in Belarus next?
  • Belarus May Seek Debt Restructuring in 2015, President Says (BBG)
 
Tyler Durden's picture

Jeff Gundlach Warns "The Fed Is About To Make A Big Mistake" (& That's Why Bond Yields Are Crashing)





Since The FOMC's "hawkish" statement, bond yields have utterly cratered as near-record speculative short positioning in bonds unwind the long-end (and worries about international problems - "and readings on financial and international developments"). However, fundamentally speaking, DoubleLine's Jeff Gundlach explains, the Federal Reserve is on the brink of making a big mistake simply put, "if Fed Chair Janet Yellen goes ahead with this plan (to raise rates for 'philosophical reasons'), she runs the risk of having to quickly reverse course and cut interest rates."

 
GoldCore's picture

Euro Gold Surges To EUR 1,168 As SYRIZA Threaten TROIKA





Calling all Greeks - now would be a good time to protect your self from TROIKA bail-ins and deposit confiscation. Also, protect against possible return to drachma. Greeks will soon learn value of a real safe haven 

 
GoldCore's picture

QE…D: Why Printing Money will end badly for the US





So who pays? Someone has to, you can not just create money out of thin air. The answer is “we do, you and I”, in the form of a devalued: currency, diminished savings and devaluing pensions.

You are witness to possibly the greatest economic slight of hand ever perpetuated on a people, when the long gaze of history looks at this decision, deflation fears will not be part of the final analysis, arrogance, stupidity and theft will be.

 
Tyler Durden's picture

Frontrunning: January 23





  • Saudi Arabia’s New King Probably Will Not Change Current Oil Policy (BBG)
  • Saudi King’s Death Clouds Already Tense Relationship With U.S. (WSJ)
  • Oil Pares Gains as New Saudi King Says Policies Stable (BBG)
  • Kuroda Says BOJ to Mull Fresh Options in Case of More Easing (BBG)
  • U.S. pulls more staff from Yemen embassy amid deepening crisis (Reuters)
  • Putin Said to Shrink Inner Circle as Hawks Beat Billionaires (BBG)
  • A Few Savvy Investors Had Swiss Central Bank Figured Out (WSJ)
 
Tyler Durden's picture

The Data Doesn't Lie - Here's What's Really Driving Interest Rates!





Hilsenrath claims a little birdie (Fed insider) told him that rates will be raised later this year. We expect the Fed is just jerking him around. There is nothing fundamentally or otherwise to suggest rates will move up. We're not sure if Hilsenrath is part of the game or just a gullible fool who is being used to keep the market off balance. Why would the Fed want the market off balance? The Fed does so intentionally because theory suggests such a strategy will improve the effectiveness of monetary policy. Regardless of what the Fed says, the reality is that interest rates are not moving up anytime soon. Here's why...

 
Tyler Durden's picture

Kaisa Default Contagion: China's $245bn Corporate Bond Market "Is Too Complacent"





As we detailed previously, the first USD-denominated Chinese corporate bond default last week - of developer Kaisa Group - signals considerably deeper problems in China's economy as one manager noted, "everyone is rethinking risk right now." As Bloomberg reports, Chinese companies comprised 62% of all U.S. dollar bond sales in the Asia-Pacific region ex Japan last year, issuing $244.4 billion and that huge (and illiquid) market "has been too complacent," according to one credit strategist who warned, investors would be “rational to adopt a cautious approach in view of the fact that anything can happen, anywhere, anytime. It would be irrational to continue thinking that after Kaisa none of the companies will see a similar fate."

 
Tyler Durden's picture

A "Conditional Bazooka": European Top Court Finds ECB's OMT "May Be Legal" But Must Meet Conditions





Moments ago, the Advocate General Pedro Cruz Villalon of the EU Court of Justice in Luxembourg delivered the non-binding opinion on issue of Mario Draghi's "unconditional" OMT. Here are the details from Reuters and Bloomberg:

  • EU COURT ADVISER SAYS OMT PROGRAMME IN LINE WITH EU LAW SO LONG AS CERTAIN CONDITIONS MET
  • EU COURT ADVISER SAYS OMT LEGITIMATE SO LONG AS THERE IS NO DIRECT INVOLVEMENT IN FINANCIAL ASSISTANCE PROGRAMME THAT APPLIES TO STATE IN QUESTION
  • EU COURT ADVISER SAYS ECB MUST OUTLINE REASONS FOR ADOPTING UNCONVENTIONAL MEASURES SUCH AS OMT PROGRAMME

In other words, Draghi's "unconditional" bazooka just became conditional, but it is still a bazooka, albeit one that will never actually be used since well over two years after it was revealed following Draghi's famous "whatever it takes" speech, it still has no legal termsheet or basis, and no definition on its pari passu or burden-sharing status. And it never will: after all it was merely meant as a precautionary device designed to scare away the bond vigilantes, and never to be actually implemented.

 
Tyler Durden's picture

Behold China's $300 Billion Accounting 'Fudge' (Or Where The Corrupt Money Flows)





When an accounting 'fudge' accounts for $300 billion of a nation's Balance of Payments, you might suspect something is amiss. And sure enough, as Goldman notes, the growing 'error and emission' items in China’s balance of payments may reflect a pickup in hidden cash transfers as China's anti-corruption probes encouraged  the corrupt oligarchs to get their money out of dodge. As Goldman warns, "such outflows may be harder to contain with regulations, a continuation of their recent acceleration could start posing tangible financial stability concerns."

 
Tyler Durden's picture

Charting The 2015 State Of The Union





It is that time of the year when the President of the United States delivers his annual "State Of The Union" address. Despite the nation's voting choice in November, President Obama's retooled message is, "The American resurgence is real... Don't let anybody tell you otherwise." The question is whether the majority of the voting public will agree with the President's new message? Before he takes to the podium with his bullish optimism, he might want to consider the following charts...

 
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