Open Market Operations

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Quantitative Deflation

As the inexorable logic of base-ten arithmetic asserts itself once again, the rats will clamber onto the pieces of floating wreckage with the best view.

Crude Plunges Below $49, Dragging Markets Lower; All Eyes On Draghi

While trader attention will soon be focused on the ECB and any potential tightening hints from the central bank, a more pressing development as US traders walk in today, will be ongoing collapse in WTI, which after crashing 5.5% yesterday, has tumbled more than 2% this morning, sliding not only below $50 for the first time since December 1, but also dropped under $49, as a near record number of net long spec positions suddenly rushes to unwind their exposure.

In Latest Tightening Move, China To Cut Money Supply Growth To 12%

In the latest warning that Beijing hopes to tighten financial condition, Reuters reported that China plans to target broad money supply growth of around 12% in 2017, down from the 13% target in 2016, signaling a bid to contain debt risks while keeping growth on track.

S&P Futures, European Stocks Bounce As Dollar Rises Most In Two Weeks; Gold, Yen Slide

The dollar rebounded from a key support level, strengthening against all major peers, pushing S&P futures higher as European shares rose, led by basic resources and real estate, while Asian stocks fall. Gold fell from its highest level since November as demand for some haven assets ebbed while global bonds declined. Oil dipped, pressured by a stronger dollar.

It's Time To Start Worrying About China Again

The central bank on Friday increased the interest rates on reverse repo by 10bp - the last time the PBOC raised OMO rates was more than two years ago in 2014. The PBOC also increased SLF rates, in what some have dubbed "the Most Important Unnoticed Global Event."

Quad Witching Arrives: Futures Steady, Stoxx 50 Erase 2016 Loss As Dollar Steadies

Quad-witching Friday has arrived, which means that alongside thin, pre-holiday liquidity and a jumpy market, we expect to see sharp, volatile moves for the rest of the day, the first of which was just noted in Europe, where stocks moved from session lows to highs in the span of minutes, in the process sending the Euro Stoxx 50 index 0.8% higher and turning it positive on the year as it reached its highest level since December 2015.

Fed Revises Reverse Repo Terms: This Is How It Will Implement The Rate Hike

As expected, in addition to raising the Fed Funds rate by 25 bps, the Fed similarly noted that it would revise the mechanics behind its reverse repo operations, raising the rate it charges on reverse repos by 25 bps to 0.5%, the actual means by which the Fed will hike rates for most market participants. Here is the statement that the Fed released regarding the change in overnight reverse repos.

Chinese Capital Outflows Send FX Reserves To Lowest Since 2011

Overnight, China reported that the PBOC’s FX reserves fell another US$46bn to US$3.121 trillion in October as the central banks struggled to offset the impact of accelerating capital outflows, triple the official September decline of US$19bn (recall that according to Goldman, the true FX outflow in recent months has been far greater), and the biggest drop since January. The October decline brought China's total reserves the lowest amount since 2011.

China Floods Economy With Over Rmb 1 Trillion In New August Credit

When one month ago China announced that it had created just Rmb 488 billion in new credit as per its broadest credit aggregation metric, Total Social Financing, there was broad concern that the PBOC had again hit the brakes on the country's rampant credit expansion. Those concerns were more than allayed, however, overnight, when the PBOC released its latest August new credit data, which saw total credit grow by well over Rmb 1 trillion.