Market Liquidity and Macroeconomic Bullshit
Courtesy of The Nattering Naybob
STJL – "Apparently macroeconomics is all bullshit – ROFL! Paging Naybob now… Famous Economist Paul Romer Says Macroeconomics Is All Bullshit."
The Nattering One muses… Macroeconomics as practiced by academics and those in charge is pure voodoo. Better to chant over goat blood, bird feathers and scattered entrails…
As for reality, overnight CNH HIBOR (offshore) 7.95% and SHIBOR (onshore) 2.12% both screaming onshore and offshore "dollar" ill liquidity for the Chinese, and Japanese by proxy.
On Aug 30, SHIBOR jumped 2% for the first time in a year. Eurodollar futures, TED spread, LIBOR and repo fails all confirming the markets lack of liquidity. Likely confirmation in today's trading, the USD dollar is down vs JPY yen and 10 yr JGB's yields are dipping back into negative yield.
How bad is it? The Fed is lacking short duration USTs for on the turn lending to those lacking USTs in repo. Read that again. Leading to the escalation of massive GC (general collateral) repo failures which manifests special prints.
In repo, "specials" to cover those short of paper are coveted and printing at -3.15% vs +0.516%, quite the price to pay, to get one's tit out of a ringer. Now that's a titty twister on your NIM (net interest margin) while trying to exit a carry trade where the duration mismatch has gone sour, OUCH and out.
