{"id":57601,"date":"2021-04-28T14:13:51","date_gmt":"2021-04-28T19:13:51","guid":{"rendered":"https:\/\/olduvai.ca\/?p=57601"},"modified":"2021-04-28T14:13:51","modified_gmt":"2021-04-28T19:13:51","slug":"weekly-commentary-peak-monetary-stimulus","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=57601","title":{"rendered":"Weekly Commentary: Peak Monetary Stimulus"},"content":{"rendered":"<h3 class=\"post-title entry-title\"><a href=\"http:\/\/creditbubblebulletin.blogspot.com\/2021\/04\/weekly-commentary-peak-monetary-stimulus.html\">Weekly Commentary: Peak Monetary Stimulus<\/a><\/h3>\n<div id=\"post-body-6813610535738917802\" class=\"post-body entry-content\">Not again. Bloomberg is referring to \u201cthe bond market riddle.\u201d The Financial Times went with the headline, \u201cUS Government Bond Investors Left Bewildered by \u2018Bonkers\u2019 Market Move.\u201d It\u2019s been three weeks of declining Treasury yields in the face of robust economic data (and surging commodities prices!). Too soon to be discussing a new \u201cconundrum,\u201d but I am finding the various explanations of Treasury market behavior interesting \u2013 if not convincing.<\/p>\n<p>Treasury market sentiment had turned negative. A decent short position had developed, and it\u2019s perfectly reasonable to expect the occasional squeeze. Squeezes, after all, have become commonplace throughout the markets. But could there be something more fundamental unfolding?<\/p>\n<p>Over the years, I\u2019ve relied upon a \u201cCore vs. Periphery\u201d model of market instability as a key facet of my analytical framework. Instability and financial crises typically emerge at the \u201cperiphery\u201d \u2013 at the fringe where the structurally weakest and most vulnerable to risk aversion and tightening financial conditions &#8211; reside. I believe this dynamic is already in play for the global Bubble, with the emerging markets earlier in the year experiencing an opening round of instability. Are we in the \u201cquiet\u201d before the next EM storm?<\/p>\n<p>The dog that didn\u2019t bark. Ten-year Treasury yields are down 18 bps this month. Meanwhile, the dollar index dropped 2.5% to a six-week low. Why haven\u2019t the emerging markets mustered a more impressive rally, especially considering the degree of bearish sentiment that had developed? Could this be as good as it gets? The week\u2019s developments lent support to the latent fragility at the \u201cPeriphery\u201d thesis. Are central bank responses to liquidity overabundance and mounting inflationary pressures an escalating risk to fragile EM Bubbles?<br \/>\n\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Weekly Commentary: Peak Monetary Stimulus Not again. Bloomberg is referring to \u201cthe bond market riddle.\u201d The Financial Times went with the headline, \u201cUS Government Bond Investors Left Bewildered by \u2018Bonkers\u2019 Market Move.\u201d It\u2019s been three weeks of declining Treasury yields in the face of robust economic data (and surging commodities prices!). Too soon to be [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,7756,16861,535,1234],"class_list":["post-57601","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-credit-bubble-bulletin","tag-doug-noland","tag-monetary-stimulus","tag-stimulus"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57601","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=57601"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57601\/revisions"}],"predecessor-version":[{"id":57602,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57601\/revisions\/57602"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=57601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=57601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=57601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}