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  1. #251
    dangerous floater Winehole23's Avatar
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    “The resilience of the open-end fund sector may again be tested, this time amid rising interest rates and high economic uncertainty. Outflows from open-end bond funds have increased in recent months, and a sudden, adverse shock like a disorderly tightening of financial conditions could trigger further outflows and amplify stress in asset markets.”

    Europe-domiciled funds reported €73 billion in net outflows to August, according to Morningstar data, excluding money market funds and funds of funds. Among the hardest hit were US bond group Pimco, Italian fund house Eurizon, UK manager Baillie Gifford, Insight Investment Management and Morgan Stanley Investment Management.

  2. #252
    dangerous floater Winehole23's Avatar
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  3. #253
    dangerous floater Winehole23's Avatar
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    the system is working as designed, for those for whom it was designed


  4. #254
    dangerous floater Winehole23's Avatar
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  5. #255
    dangerous floater Winehole23's Avatar
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    The Bank of England sought again to stem a sharp sell-off in Britain's 2.1 trillion pound ($2.3 trillion) government bond markets on Tuesday, expanding its emergency buying to inflation-linked debt.
    Citing a "material risk" to financial stability after pension firms were hit by the turmoil, the BoE split its programme to buy up to 10 billion pounds of British gilts each day to include up to 5 billion pounds of index-linked bonds.

    The expansion of the purchase programme was the BoE's fifth attempt to quell market turmoil in just over two weeks, including verbal interventions, and marked another embarrassment for Prime Minister Liz Truss whose economic agenda last month sent investors heading for the exit.
    https://www.reuters.com/markets/euro...ts-2022-10-11/

  6. #256
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    Credit Suisse and Deuthche Bank have both been caught and paying fines

    A whislteblower exposed CS for helping American, 50K? Americans, evade taxes. IIRC, none of the 50K got perp walked, like some other tax evaders.

    I noted at the time the Pres candidate Romney's tax records went back only to the year that CS got caught. did not include that years or earlier years.

  7. #257
    dangerous floater Winehole23's Avatar
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    Fed swap lines heating up


  8. #258
    dangerous floater Winehole23's Avatar
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    BOE emergency support grows as instability starts to cascade.

    So much for free markets and the genius of creative destruction.

    The Bank will now widen the emergency programme it launched on 28 September, when days after the mini-budget, investors began demanding higher rates of interest on those bonds and government borrowing costs surged to worrying levels.




    The turmoil has forced pension funds to sell bonds due to concerns over their solvency, and threatened to create a downward spiral in bond prices as more were offloaded which left some funds close to collapse.




    It has also fed through to the mortgage market, where hundreds of products have been suspended due to concerns about how to price these long-term loans.

    https://www.bbc.com/news/business-63211743

  9. #259
    dangerous floater Winehole23's Avatar
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    The remarkable thing this year isn't the drop in the S&P 500, but the strikingly bigger simultaneous drawdown in risk-off assets.

    For months, traders, academics, and other analysts have fretted that the $23.7 trillion Treasurys market might be the source of the next financial crisis. Then last week, U.S. Treasury Secretary Janet Yellen acknowledged concerns about a potential breakdown in the trading of government debt and expressed worry about “a loss of adequate liquidity in the market.” Now, strategists at BofA Securities have identified a list of reasons why U.S. government bonds are exposed to the risk of “large scale forced selling or an external surprise” at a time when the bond market is in need of a reliable group of big buyers.

    “We believe the UST market is fragile and potentially one shock away from functioning challenges” arising from either “large scale forced selling or an external surprise,” said BofA strategists Mark Cabana, Ralph Axel and Adarsh Sinha. “A UST breakdown is not our base case, but it is a building tail risk.”

    In a note released Thursday, they said “we are unsure where this forced selling might come from,” though they have some ideas. The analysts said they see risks that could arise from mutual-fund outflows, the unwinding of positions held by hedge funds, and the deleveraging of risk-parity strategies that were put in place to help investors diversify risk across assets.

    In addition, the events which could surprise bond investors include acute year-end funding stresses; a Democratic sweep of the midterm elections, which is not currently a consensus expectation; and even a shift in the Bank of Japan’s yield curve control policy, according to the BofA strategists.
    https://www.marke ch.com/story/fr...ys-11666290995

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  11. #261
    dangerous floater Winehole23's Avatar
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    it's seldom good news when public officials give reassurance. announcing a backstop for money-market funds and open-end bond funds sounds alarming to me.


  12. #262
    dangerous floater Winehole23's Avatar
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    what do you call it when a TBTF bank fails?

    This is Credit Suisse’s fourth quarterly net loss in a row. So far this year, it has posted $5.94 billion of losses. Net revenue, at $3.8 billion, was up marginally on the last quarter but down 30% from Q3-2021. The value of its asset base has also shrunk drastically, from $937 billion in December 2020 to $707 billion today.

    To steady the ship, the bank has presented a new strategic overhaul — its third in recent years. At the core of the overhaul is a plan to raise $4 billion of fresh capital. The good news for Credit Suisse is that it has already found a major backer — Saudi Arabia’s largest commercial bank, Saudi National Bank (SNB), which has pledged up to $1.52 billion of capital. That will give the SNB 9.9% of outstanding CS shares.

    Majority controlled by the House of Saud, the SNB (not to be confused with the Swiss National Bank) has also expressed an interest in participating in future capital measures of Credit Suisse to support the establishment of an independent investment bank in Saudi Arabia. If nothing else, SNB’s participation will make for interesting boardroom drama given the sovereign wealth fund of Qatar, a country that is locked in a diplomatic conflict with Saudi Arabia, has a 5% stake in the Swiss lender.

    The question now is whether or now CS will be able to secure the remaining $2.5 billion. The capital raise is already going to dilute existing CS shareholders, many of whom are miffed at having already poured $12.2 billion of additional capital into the lender — more than its current market value — since 2015. That was one reason why CS’s shares plunged a whopping 18.6% yesterday — their biggest daily fall ever. Those shares are now down an eye-watering 57% so far this year and over 95% since 2008.
    https://www.nakedcapitalism.com/2022...pean-bank.html

  13. #263
    dangerous floater Winehole23's Avatar
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  14. #264
    🏆🏆🏆🏆🏆 ElNono's Avatar
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    As long as inflation is under control and back to 2%...

  15. #265
    dangerous floater Winehole23's Avatar
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    As long as inflation is under control and back to 2%...
    we've got a ways to go to get there, and no guarantee of a soft landing. also, no guarantee the Fed won't chicken out if the economy starts hurting. historically, we've seen double tops in inflation for just this reason.

  16. #266
    🏆🏆🏆🏆🏆 ElNono's Avatar
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    we've got a ways to go to get there, and no guarantee of a soft landing. also, no guarantee the Fed won't chicken out if the economy starts hurting. historically, we've seen double tops in inflation for just this reason.
    Soft landing is desirable, but not mandatory. I know it'll hurt some people, but inflation hurts everyone, especially those that have less.

  17. #267
    dangerous floater Winehole23's Avatar
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    Risk opacity of financial derivatives is still a theme. BIS sounding the alarm on Forex swaps.

    https://www.bis.org/publ/qtrpdf/r_qt2212h.htm

    To understand how the system works, consider a Dutch pension fund buying assets in the US. As part of the transaction, it will often use a foreign-currency swap to exchange euros for dollars. Then, when it’s closed out, the fund will repay dollars and receives euros. For the length of the trade, the payment obligation is recorded off-balance sheet, which the BIS calls a “blind spot” in the financial system.

    It’s that opacity that puts policymakers at a disadvantage, according to BIS researchers Claudio Borio, Robert McCauley and Patrick McGuire.

    “It is not even clear how many analysts are aware of the existence of the large off-balance sheet obligations,” they wrote. “In times of crises, policies to restore the smooth flow of short-term dollars in the financial system -- for instance, central bank swap lines -- are set in a fog.”

    Central banks have found ways to manage the demand for dollars during times of stress. The Federal Reserve has tools, such as swap lines and the FIMA Repo Facility, to help prevent markets from seizing up.

    For researchers at the BIS, it’s the sheer scale of the swaps that’s worrying. They estimate that banks headquartered outside the US carry $39 trillion of this debt -- more than double their on-balance sheet obligations and ten times their capital. Accounting conventions only require derivatives to be booked on a net basis, so the full extent of the cash involved isn’t recorded on a balance sheet.

    “There is a staggering volume of off-balance sheet dollar debt that is partly hidden, and FX risk settlement remains stubbornly high,” said Borio, head of the monetary and economic department at the BIS

    https://www.yahoo.com/now/huge-missi...120025349.html

  18. #268
    dangerous floater Winehole23's Avatar
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    Fed says it wants to get rid of its MBSs, but has no plan.

    George said she feels the Fed's balance sheet continues to get "too little attention" in terms of how the central bank's slow withdrawal from long-term securities markets could, for example, influence the yield curve given the fast hikes in U.S. short-term interest rates delivered last year.

    The Fed hiked its benchmark overnight interest rate by 4.25 percentage points in 2022 to tame inflation that had surged to 40-year highs. It is widely expected next week to raise that rate by a quarter of a percentage point to the 4.50%-4.75% range.

    More broadly, George said, after twice launching bond purchases to support the economy, once following the 2007-2009 financial crisis and recession, and again at the onset of the COVID-19 pandemic after interest rates were cut to the near-zero level, she said the central bank should develop clearer guidelines for when the purchases are to be used, and what impact on the economy they are seen to have.

    During the pandemic, for example, the Fed was buying MBS and, in theory, pushing down mortgage rates, even though house prices were skyrocketing.

    Given that the Fed now uses its balance sheet to manage the short-term policy rate of interest, George feels it would be difficult, at the least, to return to the limited holdings the Fed had prior to the 2007 housing market meltdown.

    But she said her time on the central bank's policy-setting Federal Open Market Committee has not convinced her that bond purchases have much influence beyond inflating asset values - something future policymakers should confront.

    Quan ative easing "is out of the box and now future committees will have to think about how to manage it," George said. "I think economists have a lot more work to do on understanding this instrument. I think a lot of time was spent defending what its benefits were. I think too little attention has been paid to its consequences."
    https://www.reuters.com/markets/us/f...ys-2023-01-23/


    https://www.reuters.com/markets/us/f...ys-2023-01-23/

  19. #269
    Savvy Veteran spurraider21's Avatar
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    raised rates another 0.25% today

    range now up to 4.75-5

  20. #270
    dangerous floater Winehole23's Avatar
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    raised rates another 0.25% today

    range now up to 4.75-5
    was there any forward guidance?

  21. #271
    Savvy Veteran spurraider21's Avatar
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    was there any forward guidance?
    powell's giving a press conference

  22. #272
    dangerous floater Winehole23's Avatar
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  23. #273
    dangerous floater Winehole23's Avatar
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  24. #274
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    Fed Hikes by 25 Basis Points,

    to 5.0% at Top of Range,

    Pencils in One More Rate Hike,

    No Rate Cut in 2023,

    QT Continues:

    New Regime of Tightening while Providing Liquidity for Banks


    Stepping on the brake with one foot while putting an arm around the baby to keep her from hitting the dashboard.

    QT will continue on track, with the Treasury roll-off capped at $60 billion per month, and the MBS roll-off capped at $35 billion a month, same as in the prior months.

    No rate cut in 2023, same as the December dot plot.

    But seven of the 18 participants saw a rate of 5.375% or higher at the end of 2023, with four of them seeing 5.625% or higher.

    By hiking rates and continuing QT while simultaneously providing liquidity support for the banks,

    the Fed made a clear distinction between monetary policy (rate hikes and QT) and liquidity support.

    And the Fed will be doing both at the same time.

    https://wolfstreet.com/2023/03/22/fe...ity-for-banks/

    Meanwhile, 100+ mid-size SVB-type banks at risk of failing, 100Ks of jobs lost, and 1000s of companies to fail. The Fed will not let the oligarchy or BigCorp (profiteers driving inflation) or Capitalists suffer.

    Labor will be ed


    Last edited by boutons_deux; 03-22-2023 at 03:12 PM.

  25. #275
    dangerous floater Winehole23's Avatar
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    Labor will be ed
    that's the plan, to break inflation on the backs of working people.

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