The money market and bond guys have a scaremongering minority

Outlook

We had thought the inflation/yield story was a normal development and it was silly for traders to overreact. We were wrong. Yes, the story has been developing since last summer, when yields hit bottom, but apparently it came as a surprise that yields could become real, i.e., nominal exceeding the inflation rate for a genuine return. We are not there yet by any means, but a rise to levels we last saw a year ago after a crash to 0.380% is a mighty move in bond market terms.

See the 3-year chart, and also the WSJ version, which squashes

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Money markets, central bank balance sheets, and regulation

Money markets are an important cornerstone of the financial system. Banks, non-bank financial institutions such as investment funds and money market funds, as well as non-financial corporations rely on money markets for their short-term funding and collateral needs. Money markets are also key for the implementation and transmission of monetary policy. Short-term money market rates often serve as operational targets for central banks and represent the first step in monetary policy transmission. In addition, money market rates are important for credit conditions in the economy, as money market rates serve as a benchmark for the pricing of credit and are

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Opinion: The days of easy money in the stock market are now over

Ignore stock valuations and companies’ fundamentals at your peril.

Churchill Capital Corp. IV
CCIV,
-38.63%,
a special purpose acquisition company (SPAC) that had been rumored to merge with a Tesla-wannabe, Lucid Motors, finally announced Monday night that it is indeed going to do so. And in a classic Wall Street reaction, the market “sold the news” after long having “bought the rumor.”

CCIV was up 500% from when it went public as a blank-check company, and today the stock market has wiped half of what its market value was perceived to be Monday at noon. This is a stock

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SEC Requesting Comments on Money Market Fund Reforms

On Thursday, February 4, 2021, the U. S. Securities and Exchange Commission (“SEC”) issued a Release (No. IC-34188) (the “Release”) entitled “Request for Comment on Potential Money Market Fund Reform Measures in President’s Working Group Report.” The President’s Working Group (“PWG”) had issued its “Report of the President’s Working Group on Financial Markets Overview of Recent Events and Potential Reform Options for Money Market Funds” (“PWG Report”) on December 22, 2020. The PWG is chaired by the Secretary of the Treasury and includes the Chair of the Board of Governors of the

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Money market report for the week ended February 19

ECB monetary operations

On February 15, the European Central Bank announced the seven-day Main Refinancing Operation (MRO). The operation was conducted on February 16 and attracted bids from euro area eligible counterparties of €0.46 billion, €0.03 billion higher than the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of zero per cent, in accordance with current ECB policy.

On February 17, the ECB conducted the seven-day and 85-day US dollar funding operations through collateralised lending in conjunction with the US Federal Reserve. The seven-day USD operation attracted bids of $0.14

Read More View More Money market report for the week ended February 19