Of trillions and trilemmas
From an engaging speech by Robert Jenkins — former F&C chairman, now a member of the Bank of England’s interim Financial Policy Committee — to the “trillion dollar generation” of hedgies at the...
View ArticleAnother ECB collateral BBBackstop
As flagged earlier – the European Central Bank’s latest loosening of collateral criteria: ECB takes further measures to increase collateral availability for counterpartiesContinue reading: Another ECB...
View Article*That* Target2 presentation
We wade into choppy waters here. But, we couldn’t help ourselves… Karl Whelan, expert on all matters Target2 and arch nemesis of Hans-Werner Sinn, has encapsulated his views on Target2 a.k.a “why...
View ArticleIt’s the capital requirements, stupid
Banks are lending neither to each other, nor to the real economy, in the way they used to. In Europe in particular, loan growth remains subdued. In the UK, there’s a lot of hope riding on the Funding...
View ArticlePBoC ramps up liquidity operations
The People’s Bank of China helped Asian stocks rally on Tuesday with a reported record liquidity injection via reverse repos. From Bloomberg: The People’s Bank of China conducted 220 billion yuan...
View ArticleWhat does liquidity mean to YOU?
What matters to an investor when they are choosing assets to invest in? Risk-return is the most obvious trade-off to balance. One can narrow down by asset class and sector, dividing up to achieve...
View ArticleTAG, you’re zero
Quite the rally in T-bills… continuing apace on Friday, now that the Transaction Account Guarantee has become increasingly, quietly, talked about in the past tense ahead of a year-end renewal deadline....
View ArticleBanks, Here’s your new liquidity regime. Now stop blaming us. Love, Basel
The Basel Committee on Banking Supervision has finalised rules for bank liquidity. Some of the changes had been anticipated in recent weeks, particularly after the US banks ramped up their lobbying...
View ArticleA guide to the liquidity coverage ratio, for whingers
We’re still getting over Mervyn King saying the following when announcing changes to the liquidity coverage ratio, as Kate reported on Monday (emphasis ours): Since we attach great importance to try to...
View ArticleOnce you turn base money into short-term debt, can you go back?
Forget about the $1 trillion coin debate. The most exciting wonky discussion being had right now is between Steve Randy Waldman and Paul Krugman over whether “base money” and short-term debt are...
View ArticleSome Libor frustration
Barclays views it as imperative that the market has access to Benchmarks that are well constructed, transparent and that inspire the confidence of other market participants and regulators… You can say...
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The credit matrix
Liquidity and credit are not always best friends — Funding for Lending in the UK and the LTROs spring to mind. However, blaming liquidity alone for the lack of credit out there is obviously [expletives...
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Dr Copper, ‘telling us the party’s over…’
With the S&P 500 making a fresh run higher at pixel time, it would be rude not to share the latest thoughts of Albert Edwards, Socgen’s Ice Age bear. Rather than gawping stocks, he reckons we...
View ArticleThe ECB’s very own tapering problem
A while ago we speculated that because of the ongoing bifurcation of the eurozone market, Eonia rates could rise, and liquidity once again concentrate in core economies, as banks pay back their LTRO...
View ArticleIs QE deflationary or not?
We first proposed the idea that QE could be (but wasn’t necessarily) deflationary a couple of years ago. It was dubbed a counter-intuitive idea by Tyler Cowen. More recently, a similar proposition has...
View ArticleTo be, or not to be sterilised in the Eurozone?
Citi’s research team highlights the important point that Germany’s Bundesbank has signalled that it is open to an end to ECB sterilisation operations. The move follows consecutive failures by the ECB...
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The problem of dealer balance sheet elasticity
The chart above from a Credit Suisse note, showing that trading assets at the ten biggest US and European banks (measured by such assets) are now 17 per cent smaller than at their 2010 peak, shouldn’t...
View ArticleCare not for the depth of the market, or the neighbours
Earlier this month South Korea sold $1bn of US dollar denominated debt due in June, 2044. Issued at a spread of 72.5 basis points over a 30-year Treasury, eager buyers have since pushed the spread down...
View ArticleCall it liquidity leverage
More on the topic of liquidity, which we’re choosing to understand as the ability to buy or sell when you want to without paying a lot for the privilege. Markets composed of rational, or at least...
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