>   
>   (email exchange)
>   
>   On Tue, Aug 24, 2010 at 8:32 AM, Seth wrote:
>   
>   stocks look bad
>   looks like another panic
>   

It doesn’t look good technically.

Must be coming out of europe with gold up/euro down dynamic, etc.

Insiders there must be bailing.

Maybe they know something we don’t, or maybe they are wrong.

History is no help as in the past it’s been both.

Austerity is trimming growth there a bit around the edges, but deficits remain reasonably high, so GDP’s are probably at least muddling through, with overall growth probably positive.

The ECB keeps the short term funding channels open for the member nations, but that may not be fully appreciated yet.

On a mark to market basis bank capital is probably below requirements, and they may not realize that doesn’t have to matter to the real economy for as long as the ECB continues to fund them.

Lower crude oil prices support consumption of other things. With US crude oil product consumption up and Saudi output rising, demand must be ok. Maybe Saudis are worried and want lower prices to help world growth as well. Hard to ever say what they are actually up to. They may see the Iraqi production coming on stream and are trying to engineer an increase in demand. Again, no way to tell what they are up to.

The lower 10 year rates reflects expectations of ‘low for longer’ from the Fed due to high unemployment and falling rates of inflation as measured by the Fed. And the possibility of more QE that could flatten the curve further.

There is also the notion that there’s nothing left that the Fed can do of any consequence regarding aggregate demand, and Congress thinks it’s run out of money, which means flying without a net. That increases the weight of the downside in the balance of risks.

If markets and Congress knew that fiscal policy had no nominal limit and deficit spending was not dependent on being able to borrow from the likes of China to be paid by our grandchildren, the balance of risks would be viewed very differently. But they don’t know that.

With the elections coming and California reverting to vouchers again, the time is right for my per capita revenue sharing. But it’s not even a consideration.

Q3 and Q4 GDP estimates are looking more like 1.5%, and Q2 looks to be revised down toward 1% Friday. Not a double dip but no drop in unemployment either as productivity might be at least that high. That’s worse politically than it is for equities, and adds support for a ’second stimulus’ type of reaction. But that’s way down the road. More likely it causes most of the expiring tax cuts to be extended.

Thursday’s claims can make a big difference as well. The jump to 500,000 last week added an element of fear internationally.

Also, in thin summer markets technicals often cause exaggerated moves. Volume is very low, and a given size buying or selling causes larger moves to find someone willing to take the other side, and momentum type traders can easily overwhelm investors.

Possible sign of a ‘hand off’ to private sector credit growth as double digit deficit spending replenishes savings and eases debt service and debt service ratios.

Austerity measures will take a bit off growth at some point but probably not drive it anywhere near negative.

UK Headlines:
U.K. House Prices Increased 0.1% in July, Acadametrics Says
UK Summer Sales Drive Credit Card Spending
UK Government Bonds in Demand

UK Summer Sales Drive Credit Card Spending

Aug. 13 (Telegraph) — It might be less than a year since
the end of the worst recession since the 1930s but consumers seem
to have already forgotten the lessons of the credit crisis.

Spending on credit and debit cards rose 9.9pc in July as
consumers ignored fears of a double-dip recession and hit the
high street, according to figures from Barclaycard.

The year-on-year increase was achieved as retailers enticed
shoppers with summer discounts.

“If consumer confidence is taking a hit, it’s not happening
on the high street,” said Stuart Neal of Barclaycard. “If
spending remains at this level compared to last year, 2010 could
prove to be a very good year for retailers.”

July was the third month in a row that the annual growth
rate in sales was above 9pc, according to Barclaycard.

The report said that spending last month was 1.9pc higher
than in June, partly reflecting an earlier start to the summer
sales season.

With sufficient deficit spending private credit isn’t needed at all to sustain growth and employment, so the shift from private sector credit growth (falling M3) to 3% growth sustained by deficits of 10% of gdp is perfectly sustainable.

In fact, I’d prefer, for a given size govt, lower taxes rather than higher private sector credit growth. And a larger trade deficit means we can have taxes that much lower still. And cut out much the military expenditures for Afghanistan and cut taxes that much more, thanks! etc!

Unfortunately 3% growth doesn’t close the output gap, but that’s another (very ugly) story, but with the same answer. Agg demand is about a trillion a year short of potential right now, hence my proposal for a full payroll tax (FICA) holiday to restore private sector sales, output, and employment.

US money supply plunges at 1930s pace as Obama eyes fresh stimulus

By Ambrose Evans-Pritchard

May 26 (Telegraph) — The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

The M3 figures – which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance – began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.

“It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly,” he said.

The US authorities have an entirely different explanation for the failure of stimulus measures to gain full traction. They are opting instead for yet further doses of Keynesian spending, despite warnings from the IMF that the gross public debt of the US will reach 97pc of GDP next year and 110pc by 2015.

Larry Summers, President Barack Obama’s top economic adviser, has asked Congress to “grit its teeth” and approve a fresh fiscal boost of $200bn to keep growth on track. “We are nearly 8m jobs short of normal employment. For millions of Americans the economic emergency grinds on,” he said.

David Rosenberg from Gluskin Sheff said the White House appears to have reversed course just weeks after Mr Obama vowed to rein in a budget deficit of $1.5 trillion (9.4pc of GDP) this year and set up a commission to target cuts. “You truly cannot make this stuff up. The US governnment is freaked out about the prospect of a double-dip,” he said.

The White House request is a tacit admission that the economy is already losing thrust and may stall later this year as stimulus from the original $800bn package starts to fade.

Recent data have been mixed. Durable goods orders jumped 2.9pc in April but house prices have been falling for several months and mortgage applications have dropped to a 13-year low. The ECRI leading index of US economic activity has been sliding continuously since its peak in October, suffering the steepest one-week drop ever recorded in mid-May.

Mr Summers acknowledged in a speech this week that the eurozone crisis had shone a spotlight on the dangers of spiralling public debt. He said deficit spending delays the day of reckoning and leaves the US at the mercy of foreign creditors. Ultimately, “failure begets failure” in fiscal policy as the logic of compound interest does its worst.

However, Mr Summers said it would be “pennywise and pound foolish” to skimp just as the kindling wood of recovery starts to catch fire. He said fiscal policy comes into its own at at time when the economy “faces a liquidity trap” and the Fed is constrained by zero interest rates.

Mr Congdon said the Obama policy risks repeating the strategic errors of Japan, which pushed debt to dangerously high levels with one fiscal boost after another during its Lost Decade, instead of resorting to full-blown “Friedmanite” monetary stimulus.

“Fiscal policy does not work. The US has just tried the biggest fiscal experiment in history and it has failed. What matters is the quantity of money and in extremis that can be increased easily by quantititave easing. If the Fed doesn’t act, a double-dip recession is a virtual certainty,” he said.

Mr Congdon said the dominant voices in US policy-making – Nobel laureates Paul Krugman and Joe Stiglitz, as well as Mr Summers and Fed chair Ben Bernanke – are all Keynesians of different stripes who “despise traditional monetary theory and have a religious aversion to any mention of the quantity of money”. The great opus by Milton Friedman and Anna Schwartz – The Monetary History of the United States – has been left to gather dust.

Mr Bernanke no longer pays attention to the M3 data. The bank stopped publishing the data five years ago, deeming it too erratic to be of much use.

This may have been a serious error since double-digit growth of M3 during the US housing bubble gave clear warnings that the boom was out of control. The sudden slowdown in M3 in early to mid-2008 – just as the Fed talked of raising rates – gave a second warning that the economy was about to go into a nosedive.

Mr Bernanke built his academic reputation on the study of the credit mechanism. This model offers a radically different theory for how the financial system works. While so-called “creditism” has become the new orthodoxy in US central banking, it has not yet been tested over time and may yet prove to be a misadventure.

Paul Ashworth at Capital Economics said the decline in M3 is worrying and points to a growing risk of deflation. “Core inflation is already the lowest since 1966, so we don’t have much margin for error here. Deflation becomes a threat if it goes on long enough to become entrenched,” he said.

However, Mr Ashworth warned against a mechanical interpretation of money supply figures. “You could argue that M3 has been going down because people have been taking their money out of accounts to buy stocks, property and other assets,” he said.

Events may soon tell us whether this is benign or malign. It is certainly remarkable.

On Thu, May 27, 2010 at 12:04 PM, Marshall wrote:

Yes! For some odd reason there is a myth about the Great Depression that could not be more removed from the reality of the time. Most people believe the economy crashed between 1929 and 1932 and then remained depressed until the Second World War which finally mobilized the economy’s idle resources and brought about a full recovery. That’s complete bunk if you calculate the unemployment data correctly. Even leaving aside that fact, it is true that, once the Great Depression hit bottom in early 1933, it embarked on four years of economic expansion that constituted the biggest cyclical boom in U.S. economic history. For four years real GDP grew at a 12% rate and nominal GDP grew at a 14% rate. There was another shorter and shallower depression in 1937 CAUSED BY RENEWED FISCAL TIGHTENING. It was this second depression that has led to the misconception that the central bank was pushing on a string throughout all of the 1930s until the giant fiscal stimulus of the war time effort finally brought the economy up from depression. The financial dynamics of that huge economic recovery between 1933 and 1937 are extremely striking. Despite their insistence that changes in the stock of money were behind all the cyclical ups and downs in U.S. economic history, even Freidman and Schwartz in their “Monetary History of the United States” conceded that the money aggregates did not lead the U.S. economy out of the depression in 1932-1933. More striking, private credit seemingly had nothing to do with the take off of that economy. Industrial production off the 1932 low doubled by 1935. By contrast, bank credit to the private sector fell until the middle of 1935. Because of the collapse in nominal income during the depression, the U.S. private sector was more indebted than ever on the depression lows. Yet, somehow it took off and sustained its takeoff with no growth in private credit whatsoever. The 14% average annual increase in nominal GDP from early 1932 to 1935 resulted in huge private deleveraging because nominal income outran lagging private.

Fiscal policy is going to undergo a complete reversal as the $850 billion fiscal stimulus package wanes and the scheduled tax increases at the Federal level come into play early next year. It may be much worse if financially strapped state and local governments have to cut expenditures and raise taxes over the same time period – which is highly likely, especially as we get to the states’ budget year end which is mainly to June 30th. By then, if they haven’t got to their mandated balanced budgets, they’ll cut more staff off the payroll as that will temporarily get them to balance (from an accounting perspective). That will exacerbate the double dip, which is coming straight on schedule, as Randy predicted last year in his piece with Eric.

Looks like a better functioning refi market with new construction and prices remaining relatively low as the tax credit ends.

No sign of credit growth coming from this sector any time soon.

US Home Refinancing Jumps While Purchasing Slumps

By Julie Haviv

May 26 (Reuters) — U.S. mortgage applications to refinance home loans jumped to a seven-month high last week as rates neared record lows, but purchase demand remained stuck at a 13-year low.

Interest rates on 30-year fixed-rate mortgages, the most widely used loan, reached their lowest level since late-November 2009, the Mortgage Bankers Association said on Wednesday.

Low mortgage rates may prove to be the saving grace for the housing market as it copes with the expiration of popular home buyer tax credits.

The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 21, increased 11.3 percent.

The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 4.4 percent.

“Refinance application volume jumped last week as continuing financial market turmoil related to the budget crises in Europe extended the opportunity for homeowners to lock in at historically low mortgage rates,” Michael Fratantoni, MBA’s Vice President of Research and Economics, said in a statement.

The Eurozone Solution For Greece Is A Very “Clever Bluff”?

The Guardian is today reporting that, after weeks of crisis, the Eurozone has agreed to what appears to be a multibillion-euro assistance package for Greece that will be finalized on Monday. Member states have apparently agreed on “coordinated bilateral contributions” in the form of loans or loan guarantees to Greece, but only if Athens finds that it is unable to refinance its soaring debt and asks for help. Other sources said the aid could total €25bn (£22.6bn) to meet funding needs estimated in European capitals that Greece could need up to €55bn by the end of this year.

Once again, however, since funding is a function of interest rates, this proposal has the appearance of a very “clever bluff”. It says nothing about how high interest rates for Greece would have to go before the Greek government is somehow declared unable to refinance, and asks for additional help. The member nations probably structured the loan package and terms this way hoping to try to draw in lenders who would rely on this member nation as a back stop when making their investment decisions. However, if this ploy fails, Greek rates will go sky high in an attempt to refinance, and as Greece asks for more help, the spike in rates will make it all the more difficult for the entire Eurozone monetary system to function. Additionally, the prerequisite austerity measures will subtract aggregate demand in Greece and the rest of the Eurozone, and, to some extent, the rest of the world as well.

I have a very different proposal. It is designed to be fair to all, and not a relief package for any one member nation. It is also designed to not add nor subtract from aggregate demand, and also provide an effective enforcement tool for any measures the Eurozone wishes to introduce.

My proposal is for the ECB to distribute 1 trillion euro annually to the national governments on a per capita basis. The per capita criteria means that it is neither a targeted bailout nor a reward for bad behavior. This distribution would immediately adjust national government debt ratios downward which eases credit fears without triggering additional national government spending. This serves to dramatically ease credit tensions and thereby foster normal functioning of the credit markets for the national government debt issues.

The 1 trillion euro distribution would not add to aggregate demand or inflation, as member nation spending and tax policy are in any case restricted by the Maastricht criteria. Furthermore, making this distribution an annual event greatly enhances enforcement of EU rules, as the penalty for non compliance can be the withholding of annual payments. This is vastly more effective than the current arrangement of fines and penalties for non compliance, which have proven themselves unenforceable as a practical matter.

There are no operational obstacles to the crediting of the accounts of the national governments by the ECB. What would likely be required is approval by the finance ministers. I see no reason why any would object, as this proposal serves to both reduce national debt levels of all member nations and at the same time tighten the control of the European Union over national government finances.

Karim writes:

Generally more upbeat on economic conditions….the ‘2 Es’ remain, but adds high-profile qualifier ‘ALTHOUGH’…watching Q&A

Final Demand
Private final demand does seem to be growing at a moderate pace, buoyed in part by a general improvement in financial conditions. In particular, consumer spending has recently picked up, reflecting gains in real disposable income and household wealth and tentative signs of stabilization in the labor market. Business investment in equipment and software has risen significantly. And international trade–supported by a recovery in the economies of many of our trading partners–is rebounding from its deep contraction of a year ago. However, starts of single-family homes, which rose noticeably this past spring, have recently been roughly flat, and commercial construction is declining sharply, reflecting poor fundamentals and continued difficulty in obtaining financing.

Credit
The improvement in financial markets that began last spring continues. Conditions in short-term funding markets have returned to near pre-crisis levels. Many (mostly larger) firms have been able to issue corporate bonds or new equity and do not seem to be hampered by a lack of credit. In contrast, bank lending continues to contract, reflecting both tightened lending standards and weak demand for credit amid uncertain economic prospects.

Jobs
Some recent indicators suggest the deterioration in the labor market is abating: Job losses have slowed considerably, and the number of full-time jobs in manufacturing rose modestly in January. Initial claims for unemployment insurance have continued to trend lower, and the temporary services industry, often considered a bellwether for the employment outlook, has been expanding steadily since October. Notwithstanding these positive signs, the job market remains quite weak, with the unemployment rate near 10 percent and job openings scarce.

FF Rate
Although the federal funds rate is likely to remain exceptionally low for an extended period, as the expansion matures, the Federal Reserve will at some point need to begin to tighten monetary conditions to prevent the development of inflationary pressures.

Sequencing
Of course, the sequencing of steps and the combination of tools that the Federal Reserve uses as it exits from its currently very accommodative policy stance will depend on economic and financial developments.

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Agreed. Makes for a good stock environment.

And unemployment could even fall towards 8% which would be considered a victory
due to our absurdly low expectations.

Critical Manufacturing Improvements Lead Credit Managers’ Index Jump in January

Columbia, Maryland: February 1, 2010—The latest data is starting to turn in a decidedly positive direction; GDP numbers are the best in over a year and a half, suggesting that the recession is in clear retreat. After a mild recovery in the third quarter, numbers jumped 5.8% in the fourth. The bulk of this growth is attributed to manufacturers starting to replenish inventories, mostly since the beginning of December. This shift in strategy is reflected in the Credit Managers’ Index (CMI) numbers as well. “The jump in manufacturing was stark and unexpected and, since the decline registered in the last iteration of the index, there has been a major leap in some critical areas,” said Chris Kuehl, Ph.D., economist for the National Association of Credit Management (NACM). “The combined CMI saw a jump from 52.9 to 55.1, which is impressive enough, but the real movement came from the manufacturing side,” he said. Reinforcing the message coming from the economy as a whole, the manufacturing sector jumped from 52.1 to 55.1, reversing the trend from the December index when the sector stagnated and slipped in terms of positive factors.

There was an improved atmosphere in both manufacturing and service sectors resulting with the most activity in the combined index’s favorable factors, specifically sales and new credit applications. Sales in the combined index jumped from 56.7 to 60.7, marking the first time this figure has been above 60 in 18 months. There was also progress in new credit applications—a jump from 54.2 to 57—signaling movement in the credit sector despite ongoing issues in the financial community. One of the biggest leaps came from dollar collections, which sported readings in the 40s just nine months ago and is now at 61.3. The same pattern can be seen in amount of credit extended, now standing at 58.8 after sitting in the 40s just five months ago.

“The past pattern in the index suggests that this is developing into a classic recession exit,” said Kuehl. “The deterioration of inventory and the dramatic reduction in capacity utilization meant that any spark of demand would propel business out of this predicament and, as in past recessions, the months following the end of these strategies would show substantial growth. The trillion-dollar question is whether this growth surge can be maintained throughout the rest of the year.”

Thus far, these are the highest numbers seen in the index since February 2009 when the initial impetus of the recession was broken. Since then, growth has been even, but not dramatic. That trend of slow growth is likely to return, but the suggestion from this month’s data is that there will be pretty substantial gains for the bulk of the first quarter.

The service sector was not as dramatic as the manufacturing sector, but there was growth. The same factors seemed to be at work—increased sales and expanded availability of money. In both sectors there has been some improvement in terms of the number of accounts placed for collection and the number of disputes, and there has been a fairly steady decline in the number of bankruptcies as well. All in all, the CMI numbers of the last few months signal that business is attempting to catch up and position itself for the growth that has now finally arrived.

Manufacturing Sector

A pattern appears each time there is a recession and, in this downturn, that pattern has been as visible as it was during the recessions of the early 1970s and 1980s. The strategy employed by most companies in the face of financial strain is to reduce costs to the barest of minimums, which involves slashing the workforce, postponing or eliminating capital expenditures and reducing inventory to the lowest possible level. The CMI’s figures on capacity utilization reflect this strategy as they have fallen to levels not seen since the depths of the 1980s double-dip recession. The strategy for retailers was as extreme as it has ever been—betting that the consumer would grab whatever they could find during the holiday season—and the effort seemed to work, as the retailers managed to pull off a decent December in spite of the limited offerings. On the manufacturing side, this inventory reduction was extreme and extended such that by the end of the year supply was dangerously low, especially if one wanted to hang onto market share when recovery arrived.

“For two months, the CMI told a story. The number of disputes fell, dollars out for collection declined and so did almost all the factors that indicated debt was going unpaid,” said Kuehl. He further commented that the process of catching up on that debt was the first step toward returning inventory levels, and companies that needed to buy raw materials for production had to get current with their creditors, a process that began in earnest in November and in some cases as early as October. By December, the purchasing had officially started. The evidence of this recovery was noticeable in other sectors as well. The first transportation sector that would see gains when factories started back up was rail and, sure enough, freight volumes started to climb in the rail sector in November and have been climbing steadily ever since.

It is far too early to assert that manufacturing has finally escaped the ravages of this recession, but the first stage is underway. The boost provided by the need to replenish inventory has already helped to stabilize some of the metals prices and has resulted in renewed activity in everything from transportation to warehousing. The next step in the recovery will be for consumer demand to draw down this newly-established inventory and necessitate its replacement. This has yet to develop, but there are some hopeful signs. For the moment, the good news lies in the future, reflected in the manufacturing index by jumps in sales as well as amount of credit extended.

Service Sector

There was less dramatic movement in the service sector, but progress was registered nonetheless. The increase in sales was notable, although not as significant as in manufacturing this month. What is good to see is the index has crested above 60 in both new credit applications and dollar collections. Kuehl noted that it was only four or five months ago that both of these factors had readings in the 40s and, a year ago, new credit applications was in the 30s. The credit squeeze has certainly not ended, but there is more available now than there has been for almost 18 months. The system has not returned to the profligate ways of the last decade, but that is likely a good thing. The old-school thinking that used to dominate the banks and financial institutions seems to have made a bit of a comeback, which is now freeing up credit for those that are traditionally creditworthy.

“Unfortunately, the most noteworthy aspect of the service numbers was that the negative factors did not shrink as much as hoped, only letting the combined index of unfavorable factors drop from 52 to 51.9—a very small decline, and not the strong positive trend seen in manufacturing,” said Kuehl. The prime reason for this slowdown seems to be more accounts placed for collection than last month, attributable to the fact that many retail operations did not manage to escape the Christmas season unscathed. This pattern occurs every year as the holiday shopping season is make-or-break for retail and there are always casualties of consumer tastes and preferences. Still, more retailers went into this year’s season weaker than in the past and some did not make it, and these troubled accounts will likely add to the number of bankruptcies in months to come.

January 2010 vs. January 2009

The contrast between January 2009 and January 2010 is stark and the distance between the two is likely as broad as it will be for some time. It was a year ago that the recession reached its deepest point and the index showed numbers buried in the 40s. Now the index has climbed into solid expansion territory and is well into the mid 50s. It is not likely that this trajectory will be maintained indefinitely as there are still questions about how fast consumers will start to draw down new inventory, but there is also not much that would suggest a major decline at this point.

About the National Association of Credit Management

The National Association of Credit Management (NACM), headquartered in Columbia, Maryland, supports approximately 19,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of Affiliated Associations are the leading resource for credit and financial management information and education, delivering products and services, which improve the management of business credit and accounts receivable. NACM’s collective voice has influenced legislative results concerning commercial business and trade credit to our nation’s policy makers for more than 100 years, and continues to play an active part in legislative issues pertaining to business credit and corporate bankruptcy.

This report, complete with tables and graphs, and the CMI archives may be viewed at http://web.nacm.org/cmi/cmi.asp.

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Some of governments’ mystery money showed up in sovereign budgets funded by debt sold to investors, but more of it showed up on central bank balance sheets as a result of check writing that required no money at all.

The US govt never has nor doesn’t have dollars. It necessarily spends by changing numbers up in bank accounts, and taxes and borrows by changing numbers down in bank accounts.

The latter was 2009’s global innovation known as “quantitative easing,” where central banks and fiscal agents bought Treasuries, Gilts, and Euroland corporate “covered” bonds approaching two trillion dollars. It was the least understood, most surreptitious government bailout of all, far exceeding the U.S. TARP in magnitude.

Agreed! To the extent the purchases were govt and agency securities it was not a bailout for the issuers. To the extent it allowed investors to make profits from the govt over paying for outstanding securities it could be considered a bailout. But I think that was minimal at best.

In the process, as shown in Chart 1, the Fed and the Bank of England (BOE) alone expanded their balance sheets (bought and guaranteed bonds) up to depressionary 1930s levels of nearly 20% of GDP. Theoretically, this could go on for some time,

Indefinitely. Better still, the tsy could simply stop issuing the securities in the first place, as Charles Goodhart has recommended for the UK. That would save the transactions expenses, which are not trivial.

but the check writing is ultimately inflationary

Not per se. Only to the extent the resultant lower rates are inflationary, and the jury is out on that. Note the Fed just turned $60 billion or so in profits over to the tsy. This is interest income the private sector did not earn because the Fed bought the securities.

Point is, QE removes interest income from the non govt sectors and is thereby a contractionary bias.

and central bankers don’t like to get saddled with collateral such as 30-year mortgages that reduce their maneuverability and represent potential maturity mismatches if interest rates go up.

None of that should matter to central bankers, but agreed it does (for the wrong reasons).

So if something can’t keep going, it stops – to paraphrase Herbert Stein – and 2010 will likely witness an attempted exit by the Fed at the end of March, and perhaps even the BOE later in the year.

It can keep going, but agreed it is likely to stop.

Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but as shown in Chart 2, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve. Of course they purchased more 30-year Agency mortgages than Treasuries, but PIMCO and others sold them those mortgages and bought – you guessed it – Treasuries with the proceeds. The conclusion of this fairytale is that the government got to run up a 1.5 trillion dollar deficit, didn’t have to sell much of it to private investors, and lived happily ever – ever – well, not ever after, but certainly in 2009.

I submit it could have easily issued at least that many 3 mo bills if it wanted to but chose not to, again for the wrong reasons.

It also could have issue no securities and simply let the deficit spending sit as additional excess reserves in member bank accounts at the fed, which would be my first choice. Reserve balances are functionally nothing more than one day securities. I see no reason to issue further out the curve and thereby support the term structure of rates at higher levels.

Now, however, the Fed tells us that they’re “fed up,” or that they think the economy is strong enough for them to gracefully “exit,” or that they’re confident that private investors are capable of absorbing the balance.

Yes, in fact, it’s a non event, much like when Japan ‘exited’ from its 30t yen of excess reserves several years ago.

Not likely. Various studies by the IMF, the Fed itself, and one in particular by Thomas Laubach, a former Fed economist, suggest that increases in budget deficits ultimately have interest rate consequences and that those countries with the highest current and projected deficits as a percentage of GDP will suffer the highest increases – perhaps as much as 25 basis points per 1% increase in projected deficits five years forward.

Wonder how they explain Japan with far higher deficits than the us, less QE, and a 10 year JGB of only 1.30% vs 3.80% for the us. The term structure of rates is a function of the combination of anticipated central bank rate settings and technicals. (the three month eurodollar futures add up to the 10 year swap rate, convexity adjusted)

If that calculation is anywhere close to reality,

No reason to think they will be. They aren’t based on reality.

investors can guesstimate the potential consequences by using impartial IMF projections for major G7 country deficits as shown in Chart 3.

Using 2007 as a starting point and 2014 as a near-term destination, the IMF numbers show that the U.S., Japan, and U.K. will experience “structural” deficit increases of 4-5% of GDP over that period of time, whereas Germany will move in the other direction. Germany, in fact, has just passed a constitutional amendment mandating budget balance by 2016.

Hopefully they don’t actually do that as the recession could be severe enough to bring down the entire system of govt.

If these trends persist, the simple conclusion is that interest rates will rise on a relative basis in the U.S., U.K., and Japan compared to Germany over the next several years and that the increase could approximate 100 basis points or more. Some of those increases may already have started to show up – the last few months alone have witnessed 50 basis points of differential between German Bunds and U.S. Treasuries/U.K. Gilts, but there is likely more to come.

The fact is that investors, much like national citizens, need to be vigilant and there has been a decided lack of vigilance in recent years from both camps in the U.S. While we may not have much of a vote between political parties, in the investment world we do have a choice of airlines and some of those national planes may have elevated their bond and other asset markets on the wings of central bank check writing over the past 12 months.

Yes, govt policy, or lack of it, sets the term structure of rates. When it comes to the risk free rate, govt is necessarily price setter, as it is the monopoly supplier of reserves at the margin.

Downdrafts and discipline lie ahead for governments and investor portfolios alike. While my own Pollyannish advocacy of “check-free” elections may be quixotic, the shifting of private investment dollars to more fiscally responsible government bond markets may make for a very real outcome in 2010 and beyond.Additionally, if exit strategies proceed as planned, all U.S. and U.K. asset markets may suffer from the absence of the near $2 trillion of government checks written in 2009.

True!

It seems no coincidence that stocks, high yield bonds, and other risk assets have thrived since early March, just as this “juice” was being squeezed into financial markets. If so, then most “carry” trades in credit, duration, and currency space may be at risk in the first half of 2010 as the markets readjust to the absence of their “sugar daddy.”

True, the curve could steepen some. But at the same time, if the output gap remains high, and it becomes more likely the fed will be low for long, the term structure of rates could decline accordingly, as it did in Japan.

There’s no tellin’ where the money went?

Where it always goes. One account at the Fed is debited and another credited.

Not exactly, but it’s left a suspicious trail. Market returns may not be “so fine” in 2010.

William Gross
Managing Director

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Link:

Seven Deadly Frauds of Economic Policy (June 17, PDF Link)

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That nagging feeling that 0 rates are deflationary keeps lingering.

The following FNMA news might be even more deflationary than the Dubai news over time. I wonder if Congress was involved in this decision, as FNMA is a public/private partnership:

Fannie Mae to Tighten Lending Standards: Report

Oct. 25 (Reuters) —Fannie Mae plans to raise minimum credit score requirements next month and limit the amount of overall debt that borrowers can carry relative to their incomes, The Washington Post reported on Thursday.

Starting December 12, the automated system that the government-controlled mortgage finance company uses to approve loans will reject borrowers who have at least a 20 percent down payment but whose credit scores fall below 620 out of 850, the newspaper reported. Previously, the cut-off was 580.

Also, for borrowers with a 20 percent down payment, no more than 45 percent of their gross monthly income can go toward paying debts, the newspaper said.

A Fannie Mae spokesman told the newspaper that the limits reflect the company’s recent experience.

Loans to people with credit scores below 620 fell seriously behind at a rate approximately nine times higher than other loans purchased in the same period, Fannie Mae spokesman Brian Faith said. Loans taken out by borrowers with lots of debt also suffer higher levels of serious delinquency, he said.

“It’s not enough to help borrowers buy a home — we must also ensure that they can stay in the home over the long term,” Faith said in a statement to The Washington Post.

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He’s correct in a world that doesn’t know how to use fiscal adjustments to sustain demand.

If we had had a full payroll tax holiday and per capita revenue sharing for the states introduced immediately after the real economy started experiencing the drop in demand associated with the Lehman failure and the Masters commodity liquidation, and all along had fed funded $8/hr jobs for anyone willing and able to work, the real economy would likely not have sustained anywhere near the damage it did. Unemployment may have risen a percent or so, and the economy would have quickly recovered.

And no one outside of investors caught with bad investments would have much cared about the financial crisis.

As long as the real economy is sustained, any financial crisis is far less of a concern- 1987, 1998, Enron, etc.

Narrow banking is not the answer

By Charles Goodhart

The proponents of narrow banking focus, almost entirely, on the liability side of banks’ balance sheets, and their concern relates to the need to protect retail depositors and the payments system. While this concern is entirely valid, it has been notable in the recent crisis that virtually no retail depositors lost anything, and the payment systems continued at all times to work perfectly. The crisis was not much about that, and policies served to protect these key elements satisfactorily.

The key problem that developed, and to some large extent remains, is that the fragility was experienced in the availability of credit to the real economy, companies and households. The modern economy cannot do without credit, and the need to maintain credit flows has been uppermost in the minds of the authorities.

Credit can be replace by income, and with income restored and sustained, credit quickly follows. Unfortunately, modern governments lack the understanding of their monetary systems to adjust incomes through counter cyclical fiscal policy.

The narrow banking proposal would shift virtually all such credit flows out of narrow banking into those parts of the financial system outside the narrow banking boundary, because the narrow banks would be required to invest in safe assets. So had a narrow banking system been in place, the crisis would have been even worse, with a virtually complete cessation of credit flows to the real economy.

Banks are public private partnerships implemented presumably to serve public purpose

‘Narrow banking’ can include bank lending for home mortgages, automobiles, credit cards, and any other assets deemed to suit public purpose to help isolate those sectors from lender related issues.

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The great repricing of risk has brought us to this point and volatility seems to be settling in at lower levels as well.

So where are we?

Due to funding risks, spreads are now at levels where they need to be to provide risk adjusted returns on capital for banks to approximately represent returns on capital needed for banks to attract that capital.

For example, if a bank obtain assets that earn 2% (after expenses) above it’s funding costs, and in today’s market regulators target a 12% tier one capital ratio, the return on capital is a little over 15%.

In the past, banks struggled to make this kind of spread as they were competing with non banks that could leverage higher than that, supported by investors willing to accept much lower risk adjusted returns, and also supported by banks willing to work for lower risk adjusted returns in their higher leverage off balance sheet entities.

Credit Graph Packet

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Like depository institutions in the United States, foreign banks with large dollar-funding needs have also experienced powerful liquidity pressures over the course of the crisis. This unmet demand from foreign institutions for dollars was spilling over into U.S. funding markets, including the federal funds market, leading to increased volatility and liquidity concerns. As part of its program to stabilize short-term dollar-funding markets, the Federal Reserve worked with foreign central banks–14 in all–to establish what are known as reciprocal currency arrangements, or liquidity swap lines. In exchange for foreign currency, the Federal Reserve provides dollars to foreign central banks that they, in turn, lend to financial institutions in their jurisdictions. This lending by foreign central banks has been helpful in reducing spreads and volatility in a number of dollar-funding markets and in other closely related markets, like the foreign exchange swap market. Once again, the Federal Reserve’s credit risk is minimal, as the foreign central bank is the Federal Reserve’s counterparty and is responsible for repayment, rather than the institutions that ultimately receive the funds; in addition, as I noted, the Federal Reserve receives foreign currency from its central bank partner of equal value to the dollars swapped.

Looks like they still fail to recognize these dollar loans are functionally unsecured.

The principal goals of our recent security purchases are to lower the cost and improve the availability of credit for households and businesses. As best we can tell, the programs appear to be having their intended effect. Most notably, 30-year fixed mortgage rates, which responded very little to our cuts in the target federal funds rate, have declined about 1-1/2 percentage points since we first announced MBS purchases in November, helping to support the housing market.

Correct on this count. Treasury purchases are about interest rates and not quantity.

Currency and bank reserves together are known as the monetary base; as reserves have grown, therefore, the monetary base has grown as well. However, because banks are reluctant to lend in current economic and financial circumstances, growth in broader measures of money has not picked up by anything remotely like the growth in the base. For example, M2, which comprises currency, checking accounts, savings deposits, small time deposits, and retail money fund shares, is estimated to have been roughly flat over the past six months.

Correct here as well, where he seems to recognize the ‘base’ is not causal. Lending is demand determined within a bank’s lending criteria.

The idea behind quantitative easing is to provide banks with substantial excess liquidity in the hope that they will choose to use some part of that liquidity to make loans or buy other assets.

Here, however, there is an implied direction of causation from excess reserves to lending. This is a very different presumed transmission mechanism than the interest rate channel previously described.

Such purchases should in principle both raise asset prices and increase the growth of broad measures of money, which may in turn induce households and businesses to buy nonmoney assets or to spend more on goods and services.

Raising asset prices is another way to say lowering interest rates, which is the same interest rate channel previously described.

In a quantitative-easing regime, the quantity of central bank liabilities (or the quantity of bank reserves, which should vary closely with total liabilities) is sufficient to describe the degree of policy accommodation.

The degree of policy accommodation is the extent to which interest rates are lower than without that accommodation, if one is referring to the interest rate channel, which at least does exist.

The quantity of central bank liabilities would measure the effect of the additional quantity of reserves, which has no transmission mechanism per se to lending or anything else, apart from interest rates.

However, the chairman is only defining his terms, and he’s free to define ‘accommodation’ as he does, though I would suggest that definition is purely academic and of no further analytic purpose.

Although the Federal Reserve’s approach also entails substantial increases in bank liquidity, it is motivated less by the desire to increase the liabilities of the Federal Reserve than by the need to address dysfunction in specific credit markets through the types of programs I have discussed. For lack of a better term, I have called this approach “credit easing.”11 In a credit-easing regime, policies are tied more closely to the asset side of the balance sheet than the liability side, and the effectiveness of policy support is measured by indicators of market functioning, such as interest rate spreads, volatility, and market liquidity. In particular, the Federal Reserve has not attempted to achieve a smooth growth path for the size of its balance sheet, a common feature of the quantitative-easing approach.

Here he goes back to his interest rate transmission mechanism which does exist. But the implication is still there that the quantity of reserves does matter to some unspecified degree.

As we just saw in slide 6, banks currently hold large amounts of excess reserves at the Federal Reserve. As the economy recovers, banks could find it profitable to be more aggressive in lending out their reserves, which in turn would produce faster growth in broader money and credit measures and, ultimately, lead to inflation pressures.

When he turns to the ‘exit strategy’ it all goes bad again. Banks don’t ‘lend out their reserves.’ in fact, lending does not diminish the total reserves in the banking system. Loans ‘create’ their own deposits as a matter of accounting. If the banks made $2 trillion in loans tomorrow total reserves would remain at $2 trillion, until the Fed acted to reduce its portfolio.

Yes, lending can ‘ultimately lead to inflation pressures’ but reserve positions are not constraints on bank lending. Lending is restricted by capital and by lending standards.

Under a gold standard loans are constrained by reserves. Perhaps that notion has been somehow carried over to this analysis of our non convertible currency regime?

As such, when the time comes to tighten monetary policy, we must either substantially reduce excess reserve balances or, if they remain, neutralize their potential effects on broader measures of money and credit and thus on aggregate demand and inflation.

Again, altering reserve balances will not alter lending practices. The Fed’s tool is interest rates, not reserve quantities.

Although, in principle, the ability to pay interest on reserves should be sufficient to allow the Federal Reserve to raise interest rates and control money growth, this approach is likely to be more effective if combined with steps to reduce excess reserves. I will mention three options for achieving such an outcome.

More of the same confusion. Yes, paying interest will be sufficient to raise rates. However a different concept is introduced, raising interest rates to control ‘money growth’ rather than, as previously mentioned, raising rates to attempt to reduce aggregate demand. Last I read and observed the Fed has long abandoned the notion of attempting control ‘money growth’ as a means of controlling aggregate demand. The ‘modern’ approach to monetarism that prescribes interest rate manipulation to control aggregate demand does not presume the transmission mechanism works through ‘money supply’ growth, but instead through other channels.

First, the Federal Reserve could drain bank reserves and reduce the excess liquidity at other institutions by arranging large-scale reverse repurchase agreements (reverse repos) with financial market participants, including banks, the GSEs, and other institutions.

Reverse repos are functionally nothing more than another way to pay interest on reserves.

Second, using the authority the Congress gave us to pay interest on banks’ balances at the Federal Reserve, we can offer term deposits to banks, roughly analogous to the certificates of deposit that banks offer to their customers. Bank funds held in term deposits at the Federal Reserve would not be available to be supplied to the federal funds market.

This is also just another way to pay interest on reserves, this time for a term longer than one day.

Third, the Federal Reserve could reduce reserves by selling a portion of its holdings of long-term securities in the open market.

Back to the confusion. The purpose of the purchase of long term securities was to lower long term rates and thereby help the real economy. Selling those securities does the opposite- it increases long term rates, and will presumably slow things down in the real economy.

However, below, he seems to miss that point, and returns to assigning significance to ‘money supply’ measures.

Each of these policy options would help to raise short-term interest rates and limit the growth of broad measures of money and credit, thereby tightening monetary policy.

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China Big 4 Banks’ New Loans Drop to Year’s Low, Caijing Says

Oct. 12 (Bloomberg) — China’s four biggest commercial banks
extended new yuan-denominated loans of about 110 billion yuan ($16
billion) in September, the lowest monthly figure in 2009, Caijing
magazine reported, citing industry data.

China Construction Bank Corp. had the highest new loans, totalling
44 billion yuan, Industrial & Commercial Bank of China Ltd. and
Agricultural Bank of China each lent about 30 billion yuan while Bank of
China Ltd.’s new yuan loans totalled around 3 billion yuan, the magazine
said, without giving a total figure for overall new lending for the month.

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Two things:

1. Sales remain soft.
2. The federal deficit spending facilitates the same amount of sales with less credit.

>   
>   (email exchange)
>   
>   On Sun, Jul 12, 2009 at 9:20 AM, Dave wrote:
>   
>   Yet another month where the decline in consumer credit comes in worse than
>   expected: Total Credit decline from $2,475 billion to $2,463, with the bulk
>   of the $12 billion decline consisting of Revolving Credit reduction, or $10
>   billion, to $900 billion. Total consumer credit is now back to July 2007
>   levels… and the decline has yet to decelerate. This is the seventh straight
>   month of consumer credit declines.
>   

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A Year Later, Little Change on Wall St.

As previously suggested, wealth is flowing to the top from the bottom as gdp grows some, unemployment climbs, and wages languish:

Despite the predictions last year about pay cuts, those bonuses appear secure. Kian Abouhossein, an analyst at J.P. Morgan in London, predicted this week that eight major American and European banks would pay the 141,000 employees in their investment banking units $77 billion in 2011 — about $543,000 per worker, not far from the 2007 peak — even after minor regulatory changes are adopted.

>   
>    Can the mortgage fraud environment return?
>   

Lenders/investors will be smarter for a while, best guess. But always ripe for the next fraud.

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Yes, consumer installment debt tends to fall with rising federal deficits.

The income and savings added by the higher deficits helps sustain consumption without as much consumer debt as would otherwise be necessary.

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Don’t think markets are ready for this:

Exporters warn of German credit squeeze

by Ralph Atkins

June 26th (Bloomberg) — Germany’s powerful export industry is warning of a credit squeeze in Europe’s largest economy even after the European Central Bank’s injection this week of one-year liquidity into the eurozone banking system.

The German BGA exporters’ association on Thursday forecast a “dramatic deterioration” in credit conditions in coming months, which would result in “massive financing squeeze”.

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From the good professor who brought us the ‘Taylor Rule’ for Fed funds:

Exploding debt threatens America

by John Taylor

May 26 — Standard and Poor’s decision to downgrade its outlook for British sovereign debt from “stable” to “negative” should be a wake-up call for the US Congress and administration. Let us hope they wake up.

And yet another black mark on the ratings agencies.

Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it.

Gdp is a measure of our ability to change numbers on our own spread sheet?

The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.

Almost as high as Italy and Italy does not even have its own currency.

“A government debt burden of that [100 per cent] level, if sustained, would in Standard & Poor’s view be incompatible with a triple A rating,” as the risk rating agency stated last week.

Now there’s quality support for an academic position…

I believe the risk posed by this debt is systemic and could do more damage to the economy than the recent financial crisis.

‘Believe’? Without even anecdotal support? Is that the best he can do? This is very poor scholarship at best.

To understand the size of the risk,

I think he means the size of the deficit, but is loading the language for effect.

Is that what serious academics do?

take a look at the numbers that Standard and Poor’s considers. The deficit in 2019 is expected by the CBO to be $1,200bn (€859bn, £754bn). Income tax revenues are expected to be about $2,000bn that year, so a permanent 60 per cent across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP?

This presumes an unspoken imperative to bring them down. Again poor scholarship.

Inflation will do it. But how much? To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100 per cent increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82 per cent. A 100 per cent increase in the price level means about 10 per cent inflation for 10 years. But it would not be that smooth – probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession.

Ok. Inflation, if it happens as above, can bring down the debt ratio. How does this tie to his initial concern over solvency implied in his reference to the AAA rating being a risk for our ‘ability to service it?’

And still no reason is presented that 41% is somehow ‘better’ than 82%.

Nor any analysis of aggregate demand, and how the demand adds and demand leakages interact. Just an ungrounded presumption that a lower debt to GDP ratio is somehow superior in some unrevealed sense.

The fact that the Federal Reserve is now buying longer-term Treasuries in an effort to keep Treasury yields low adds credibility to this scary story, because it suggests that the debt will be monetised.

So what does ‘monetised’ mean? I submit it means absolutely nothing with non convertible currency and a floating fx policy.

That the Fed may have a difficult task reducing its own ballooning balance sheet to prevent inflation increases the risks considerably.

And the presumption that the Fed’s balance sheet per se with a non convertible currency and floating exchange rate policy is ludicrous. All central bankers worth any salt know that causation runs from loans to deposits and reserves, and never from reserves to anything.

And 100 per cent inflation would, of course, mean a 100 per cent depreciation of the dollar.

He’s got that math right- if prices remain where they are today in the other currencies and purchasing power parity holds. And he also knows both of those are, for all practical purposes, never the case.

Why has he turned from academic to propagandist? Krugman envy???

Americans would have to pay $2.80 for a euro; the Japanese could buy a dollar for Y50; and gold would be $2,000 per ounce. This is not a forecast, because policy can change;

And it assumes the above, Professor Taylor

rather it is an indication of how much systemic risk the government is now creating.

So currency depreciation is systemic risk?

Why might Washington sleep through this wake-up call? You can already hear the excuses.

“We have an unprecedented financial crisis and we must run unprecedented deficits.” While there is debate about whether a large deficit today provides economic stimulus, there is no economic theory or evidence that shows that deficits in five or 10 years will help to get us out of this recession.

Huh? None??? What’s he been reading other than his own writings and the mainstream tagalongs?

Such thinking is irresponsible. If you believe deficits are good in bad times, then the responsible policy is to try to balance the budget in good times.

Ahah, a logic expert!!! That makes no sense at all.

The CBO projects that the economy will be back to delivering on its potential growth by 2014. A responsible budget would lay out proposals for balancing the budget by then rather than aim for trillion-dollar deficits.

‘Responsible’??? As if there is a morality issue regarding the budget deficit per se???

“But we will cut the deficit in half.” CBO analysts project that the deficit will be the same in 2019 as the administration estimates for 2010, a zero per cent cut.

“We inherited this mess.” The debt was 41 per cent of GDP at the end of 1988, President Ronald Reagan’s last year in office, the same as at the end of 2008, President George W. Bush’s last year in office. If one thinks policies from Reagan to Bush were mistakes does it make any sense to double down on those mistakes, as with the 80 per cent debt-to-GDP level projected when Mr Obama leaves office?

The biggest economic mistake of our life time might have been not immediately reversing the Clinton surpluses when demand fell apart right after 2000. And, worse, spinning those years to convince Americans that the surpluses were responsible for sustaining the good times, when in fact they ended them, as they always do. Bloomberg reported the surplus that ended in 2001 was the longest since 1927-1930. Do those dates ring a bell???

The time for such excuses is over. They paint a picture of a government that is not working, one that creates risks rather than reduces them. Good government should be a nonpartisan issue. I have written that government actions and interventions in the past several years caused, prolonged and worsened the financial crisis.

Lack of a fiscal adjustment last July is what allowed the subsequent collapse

The problem is that policy is getting worse not better. Top government officials, including the heads of the US Treasury, the Fed, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission are calling for the creation of a powerful systemic risk regulator to reign in systemic risk in the private sector. But their government is now the most serious source of systemic risk.

Finally something I agree with. Our biggest risk is that government starts reigning in the deficits or fails to further expand them should the output and employment remain sub trend.

The good news is that it is not too late. There is time to wake up, to make a mid-course correction, to get back on track. Many blame the rating agencies for not telling us about systemic risks in the private sector that lead to this crisis. Let us not ignore them when they try to tell us about the risks in the government sector that will lead to the next one.

The writer, a professor of economics at Stanford and a senior fellow at the Hoover Institution, is the author of ‘Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis’

It’s not too late for a payroll tax holiday, revenue sharing with the states on a per capita basis, and federal funding of an $8 hr job for anyone willing and able to work that includes federal health care, to restore agg demand from the bottom up, restoring output, employment, and ending the financial crisis as credit quality improves.

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• IG On-the-run Spreads (Released 5:02 EST)
• IG6 Spreads (Released 5:02 EST)
• IG7 Spreads (Released 5:02 EST)
• IG8 Spreads (Released 5:02 EST)
• IG9 Spreads (Released 5:02 EST)

IG On-the-run Spreads (May 11)

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IG6 Spreads (May 11)

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IG7 Spreads (May 11)

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IG8 Spreads (May 11)

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IG9 Spreads (May 11)

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