The Institutional Risk Analyst

The difference between the Western markets that settle predominantly in cash and Asian markets where physical delivery is the norm is fundamental. A growing number of global central banks are moving their physical gold out of the US because of the erratic behavior of Donald Trump. They fear expropriation of their gold by a future government in Washington.

The Treasury market/bank industry PR lobbyist angle on the Fed's eSLR proposal is a little fake-out for the financial media. This not about buying more Treasury debt but instead buying back more bank stocks. Sabe?

The Fed's actions in 2008 and again in March 2020 were largely driven by the sole mandate of the central bank -- to keep the Treasury market opening and functioning.

TD was up about 6% over the past three months, the only name in our test group with a positive three-month market return, of note.

Our bet is that the Bessent "3-3-3" plan likewise will be a failure and that the Fed will be forced to restart QE sooner rather than later

The Basel Accord is one of the single biggest examples of a regulatory agency literally creating a new law from whole cloth.

In the 1950s through maybe into the late 1990s, the FOMC could control mortgage interest rates....

Perhaps Chairman Powell will be kind enough to fall on his sword on way out the door to make things easier for a future Chairman Waller...

Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell are another bank failure or two away from returning to the private sector.

The cult of ever falling interest rates goes back 50 years and spans the terms of Fed chairs back to Alan Greenspan and Paul Volcker...

As the scale of Fed open market operations grew since 2008, volatility has increased, rendering the adjustment from QE to QT problematic

The real message to the FOMC is this: hike another 75bp in July and then let the Fed funds target sit for a few meetings...

Benevolence, as Chris and I noted in our book "Financial Stability," always gets you more bang for the buck than being miserable.

If you consider QE “stimulus” inflationary, then Fed policy actually accelerated inflation in the November-January period.

The Fed’s chief concern is keeping the Treasury debt market open and functional. Liquidity includes cash and risk-free collateral...

Our contributor Ralph Delguidice ("Are Leveraged Loans a Problem? Yes, and No. And YES") reminds us that noted economist Zoltan Pozsar has long argued that QE-created bank reserves are not --and have never been --“excess.” In fact, he notes, they remain the ONLY settlement medium that can be used to meet the now binding (intra-day) liquidity requirements and all the other regulatory constraints on bank capital and assets. Pozsar wrote in his paper “A Macro View of Shadow B

Volcker specifically chides Bernanke and Yellen for their fixation on a two percent inflation target, one of the main ornaments on the data dependent Fed Christmas Tree. “How did central bankers fall into the trap of assigning such weight to tiny changes in a single statistic, with all of its inherent weakness?” he asks. Good question. Volcker writes in Bloomberg. Deflation is a threat posed by a critical breakdown of the financial system.

Chair Yellen Spills the Punch Bowl