“About two years ago, I had a pleasure meeting with you, Professor Krugman. We were talking during that time that a rocket has to go out of the atmospheric region, which means that an escape velocity has to be earned in order to lift the Japanese economy out of deflation and we were looking for a good speed to do that. We worry about the accumulated debt. That is a source of another concern. What to do about it?”
It was just last week when we observed and reported a highly amusing example of what excessive central bank meddling hath wrought in DM government bond markets. Just nine days later, the very same dynamic that sent JGB 10s on a wild two-day ride played out again - only in reverse.
Just 24 hours after hitting record low negative yields, trading of Japan’s government bond futures was halted for 30 second after the price of the contracts dropped as much as 0.6% driven by a sudden, dramatic selloff in the 10 Year JGB. The Benchmark bond tumbled, pushing yields up eight basis points to minus 0.015 percent as of 2:51 p.m. Yields rebounded after dropping more than five basis points to a record minus 0.1 percent Tuesday.
Global Stocks, Oil Continue Streamrolling Shorts On Last Minute Hopes For G-20 Stimulus AnnouncementSubmitted by Tyler Durden on 02/26/2016 08:00 -0400
With the conclusion of this weekend's G-20 unknown, and many still expecting a major stimulus, the squeeze will likely continue into the close of trading ahead of the weekend when nobody will want to be caught short into what may end up being another global coordinated intervention to prop up markets. “With a lot of policy events coming there is a fair chance of more stimulus plans so the markets can squeeze higher,” said Benno Galliker, a trader at Luzerner Kantonalbank AG. "The big reversal shows that there is some expectation building up into those events."
According to a report by Mitsubishi UFJ's John Hermann, one of the most important, if volatile, series in the overall monthly update, that of commercial aircraft orders made absolutely no sense. As he notes, in January Boeing reported a 70% drop in actual aircraft unit orders (the same in dollar terms), and yet according to the Department of Commerce, the matched series of nondefense aircraft orders soared by 54% in January. How could this be? Simple: seasonal adjustments.
Deja vu all over again. Just as we saw after yesterday's "glitch" in POMO unleashed a huge short-squeeze buying rampage, so today's "technical issue"-delayed 7Y Auction has sparked panic-buying in stocks...
"The close of the auction has been rescheduled due to a technical issue. The settlement date and all other aspects of the auction remain unchanged from the original announcement. Competitive and noncompetitive bids that have been submitted will still stand, but bidders may review and update bids until the auction closes."
What's more bullish than a cancelled POMO?
After yesterday's strong 2Year auction, there was some confusion how today's issue of $34 billion in 5 Year paper would transpire, especially after the previously reported "technical difficulties" which prevented the NY Fed from conducting today's MBS POMO - something that has not happened in years. Well, the results are in and the auction was an absolute blockbuster.
Is This Why Stocks Are Suddenly Surging: NY Fed Cancels Today's POMO Due To "Technical Difficulties"Submitted by Tyler Durden on 02/24/2016 13:13 -0400
"Due to technical difficulties, the Wed, February, 24, 2016 (11:15 – 11:45am) agency MBS outright operation was cancelled. The operation will be rescheduled for a later time. Please continue to check this website for updates."
The Fed may have officially tapered QE at the end of 2014 but that doesn't mean it is done buying Treasuries: since the Fed never ended rolling over maturing paper, it means that it will remain indefinitely active in the open market. And while there were no sizable maturities from the Fed's various QEs to date (only $474 million in 2014 and $3.5 billion in 2015) that will change dramatically this year, when Brian Sack's team will have to purchase about $216 billion to replace matured TSYs. According to JPM calculations, this represents half the net new government debt that will be issued over the next 12 months.
IMF Says It Will Continue Lending To Ukraine Even After A Default, And Why This Is Bad News For Greek GoldSubmitted by Tyler Durden on 06/13/2015 23:01 -0400
As we enter Sunday and what may well be the last possibility to get deal done before the "accidental" Grexit scenario is put in play, we thought our Greek readers would be interested to learn that while Lagarde's "apolitical" IMF is digging in tooth and nail against giving Greece even the smallest amount of breathing room, the equivalent of half an our of a typical daily Fed POMO notional amount, yesterday the same Lagarde said that the IMF "could lend to Ukraine even if Ukraine determines it cannot service its debt."