Eurodollar University

Something just hit the US banking system. Tons of cash gone from their balance sheet seemingly as they reallocate their assets. At the same time this is going on, the dollar has surged against primarily Asian currencies rocking those countries and leading to several government backlashes. Are these all related? The answer appears to be, yes.Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

The bedrock assumption for a soft landing in the US is continued consumer spending. The economy around the world really needs Americans to keep spending at close to the same rate. Instead, more evidence is coming in that they are just out of gas. In addition to macro statistics, more retailers are confirming the downturn and no longer just those who sell to lower-income consumers.  Eurodollar University's conversation w/Steve Van MetreTarget Introduces New Brand, dealworthy, Featuring Low Prices on Everyday Basicshttps://corporate.target.com/press/release/2024/02/target-introduces-new-brand,-dealworthy,-featuring-low-prices-on-everyday-basicshttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

It isn't prospective rate cuts, the downward bias in market interest rates comes from real risks in the global system. The biggest of those are US commercial real estate (CRE) and China. Key developments in both show that the situation is fragile and that difficulties are serious even if playing out mainly in the shadows. Eurodollar University's Money & Macro AnalysisBloomberg Real Estate Pain Is Showing Up in an Obscure Investment Producthttps://www.bloomberg.com/news/articles/2024-03-19/real-estate-pain-is-showing-up-in-collateralized-loan-obligations-closBloombergTV with Carson Blockhttps://www.bloomberg.com/news/videos/2024-03-19/carson-block-warms-to-blackstone-mortgage-trust-short-videoBloomberg Short Seller Block Says He’s Even ‘More Bearish’ on Blackstone Mortgage Trusthttps://www.bloomberg.com/news/articles/2024-03-19/block-says-he-s-even-more-bearish-on-blackstone-mortgage-trustSCMP China Vanke secures US$194 million loan from Industrial Bank in brief respite for troubled property developerhttps://www.scmp.com/business/article/3256021/china-vanke-secures-us194-million-loan-industrial-bank-brief-respite-troubled-property-developerhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Few were expecting anything more than a few franc sales from the Swiss National Bank today. Instead, the SNB boldly cut its ST rate specifically because it knows what's coming from around the rest of the world. And that doesn't mean inflation in Switzerland or anywhere else.Eurodollar University's Money & Macro AnalysisSNB Monetary Policy Assessment March 21, 2024https://www.snb.ch/en/publications/communication/press-releases-restricted/pre_20240321SNB Introductory remarks, news conferencehttps://www.snb.ch/en/publications/communication/speeches-restricted/ref_20240321_tjnmslanmarTaiwan Ministry of Economic Affairshttps://www.moea.gov.tw/Mns/dos_e/bulletin/Bulletin_En.aspx?kind=14&html=1&menu_id=6744&bull_id=16037ECB Combined monetary policy decisions and statement 7 March 2024https://www.ecb.europa.eu/press/pressconf/shared/pdf/ecb.ds240307~8e06c79bf2.en.pdf?e86e578f1a99fdaa095a37dc4f1f6355https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

A wild FOMC meeting triggered by a rejiggering of the dots. Those don't really matter except as insight into how confused policymakers have become. Why are they confused? Rate hikes don't appear to be working, so they are having a hard time deciding what should happen next. Markets aren't so conflicted, only about the likeliest path for ST rates. Eurodollar University's Money & Macro AnalysisFOMC March 2024 Policy Statementhttps://www.federalreserve.gov/monetarypolicy/files/monetary20240320a1.pdfFOMC March 2024 Summary of Economic Projectionshttps://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240320.pdfCSPAN: President Biden Campaign Remarks March 8, 2024https://www.c-span.org/video/?534118-1/president-biden-delivers-campaign-remarks-philadelphiahttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

Well, they did it. The Bank of Japan ended its NIRP and YCC, raising its call money rate for the first time in forever. That's not the issue. Why they did it is open for debate, one that right now is taking place across markets. It's not going well for the rate-hikers. Eurodollar University's Money & Macro AnalysisBoJ Statement March 19, 2024https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2024/k240319a.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

The Fed. Japanese destiny. Down Under. The Old Lady, Mexico, Brazil, and the Czech Republic. And those are just the start. A ton of central banks are going to be deliberating just this week. And while their policies don't really mean much to the economy, they can impact markets in the short run while also providing some somewhat useful clues about where the world really stands. Here's what to look for as it unfolds. Eurodollar University's Money & Macro Analysishttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

The Fed shut down the BTFP, but just before it closed billions in loans were made to banks over the repeated objections of policymakers. Officials have been pushing depositories toward the Discount Window to the point even the FHLB system is dissuading its members from using its own advances as emergency liquidity. Yet, the last-minute BTFP indicates banks just aren't doing it with some substantial implications. Eurodollar University's conversation w/Steve Van MetreFHFA FHLBank System at 100: Focus On the Futurehttps://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHLBank-System-at-100-Report.pdfFHFA Fact Sheet https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/FHLBank-System-at-100-Fact-Sheet.pdfhttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

China just held its National People's Congress amidst more economic and financial turmoil than at any time in its modern history. Two things quickly became clear: Xi Jinping continues to insulate himself politically from any potential fallout; his government has no idea what to be about it. The latest data from Chinese banks and the country's housing market highlight the gravity of the situation  and how little policies are helping. Eurodollar University's Money & Macro AnalysisPeople's Daily Graphic and Text Databasehttp://paper.people.com.cn/rmrb/html/2024-02/02/nw.D110000renmrb_20240202_3-03.htmChina State TV The Opening Meeting of the Second Session of the 14th NPChttps://www.youtube.com/watch?v=nL7iqyx-dBABloomberg China Vanke’s Dollar Bonds Signal Fears of Default Down the Roadhttps://www.bloomberg.com/news/articles/2024-03-13/china-vanke-s-dollar-bonds-signal-fears-of-default-down-the-roadBloomberg China Sets GDP Goal That Needs Policy Support ‘From All Fronts’https://www.bloomberg.com/news/articles/2024-03-05/china-s-gdp-growth-target-this-year-set-around-5-reuters-sayshttps://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU

More recession signals. We've got the major dollar store chains in the US closing stores and reporting troubling results about consumer behavior. Those are now backed up by hard evidence in the form of retail sales, which have been much worse than initial thought. Behind everything, the looming recession, is the fact oil prices are NOT inflation nor inflationary. Eurodollar University's Money & Macro AnalysisDollar General Q4 2023 resultshttps://investor.dollargeneral.com/websites/dollargeneral/English/2120/us-press-release.html?airportNewsID=977d63ef-cf4e-4b0b-bd80-624b382724f6https://www.eurodollar.universityTwitter: https://twitter.com/JeffSnider_EDU