2007-12-19 US Economic Releases

Purchase Applications going back 5 years MBA Mortgage Applications (Dec 14) Survey n/a Actual -19.5 Prior 2.5 Revised n/a Looks like it’s still turning up, and continues to be up year over year. Note the sharp fall off every December into year end and quick bounce back early Jan. ♥ ...Read More

Inflation Picture has Deteriorated

He’s on the opposite spectrum from Yellen, but inflation has deteriorated to the point where risks are elevated. Once the fed has figured out it can control the FF/LIBOR with TAF type or repo and ‘market functioning’ somewhat restored, I expect that the imperative to cut rates will be greatly diminished. Fed’s ...Read More

Fed finally gets it?, continued..

Just noticed that as well as limiting the size of the auction, the Fed is limiting tenders from any one insitution to 10% of the auction. Seems the FOMC still doesn’t quite get it yet. :( ♥ ...Read More

Fed finally gets it?

The Fed was finally successful in cutting the fed funds/libor spread with a glorified 28 day repo, after failing to narrow the spread with 100 bp of rate cuts. Narrowing the ff/libor spread ‘automatically’ lowers various libor based funding rates, probably including jumbo mtg rates, which have been a concern of the ...Read More

The Trillion Dollar Day

The Trillion Dollar Day Yesterday, $1.048 trillion dollars was printed out of thin air, which gave the globe its first Trillion Dollar Day. Everyday, all government spending is ‘printed out of thin air’, and all payments to the government ‘vanish into thin air’. However, there were no net payments yesterday for all ...Read More

Libor rates & spreads: down in GBP & EUR, stable in US

Thanks, Dave, my thought are the Fed will also ‘do what it takes’ which means setting price and letting quantity for term funding float. The ECB doing 500 billion without ‘monetary consequences’ beyond lowering the term rates should have been no surprise to anyone who understands monetary ops, and confirmation of same ...Read More

ECB offers unlimited cash

Good to see the ECB seems to understand it’s about price and not quantity. The reporter isn’t quite there, however. Maybe when the smoke clears and it turns out no net euros are involved the financial press will get it right. Or maybe they will accuse the ECB of ‘tricking the markets’ ...Read More

Re: ffm questions

On Dec 18, 2007 1:09 AM, Scott Fullwiler wrote: > Hi Warren > > A few questions on your take on fed funds market data– > > Std dev of fed funds rate is way up since summer compared to normal, but > looking at the high-low numbers, the deviation (at least ...Read More

MBS Repo Markets

Thanks Pat, good report. Yes, the Fed knows the assets won’t go away, and all they want is to see funding spreads narrow to help insure the banks aren’t forced to sell due to funding issues and thereby distort prices beyond prudent repricing of risk. TAF auction (20bb) results announcement will come ...Read More

2007-12-18 US Economic Releases

Housing Starts (Nov) Survey 1176K Actual 1187K Prior 1229K Revised 1232K Building Permits (Nov) Survey 1150K Actual 1152K Prior 1178K Revised 1170K While housing is still down and out, I’m going out on a limb and saying it’s not going to get much worse, and the next meaningful move is up, particularly ...Read More