{"id":8830,"date":"2015-06-05T05:53:40","date_gmt":"2015-06-05T10:53:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=8830"},"modified":"2015-06-05T05:53:40","modified_gmt":"2015-06-05T10:53:40","slug":"get-used-to-selloffs-central-bankers-say-as-they-fret-about-the-terrifying-moment-when-liquidity-evaporates","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=8830","title":{"rendered":"Get Used to Selloffs, Central Bankers Say as They Fret about the Terrifying Moment When Liquidity Evaporates"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/06\/05\/get-used-to-selloffs-central-bankers-say-as-they-fret-about-the-terrifying-moment-when-liquidity-evaporates\/\" target=\"_blank\">Get Used to Selloffs, Central Bankers Say as They Fret about the Terrifying Moment When Liquidity Evaporates<\/a><\/h3>\n<p>Axel Weber, president of the Bundesbank and member of the ECB\u2019s Governing Council until he quit both in 2011 to protest the ECB\u2019s bond purchases, quickly landed a new gig: chairman of UBS.\u00a0<em>WHIRR<\/em>\u00a0went the revolving door. From this perch, he\u00a0<a href=\"http:\/\/www.handelsblatt.com\/politik\/konjunktur\/geldpolitik\/staatsanleihenkaeufe-ubs-praesident-axel-weber-kritisiert-ezb-scharf\/7146916.html\"><u>warned<\/u><\/a>\u00a0in 2012 that the easy-money policies and the expansion of central-bank balance sheets would lead to \u201cnew turmoil in the financial markets.\u201d Now that the turmoil has arrived, he\u2019s at it again.<\/p>\n<p>\u201cVolatility and repricing\u201d \u2013 a euphemism for losses \u2013 are \u201cpart of getting back to normal,\u201d he told\u00a0<a href=\"http:\/\/www.nbcnews.com\/watch\/cnbc\/weber-liquidity-problematic-for-global-bonds-457212483631\"><u>NBC<\/u><\/a>. We should get used to it, he said, echoing what ECB President Mario Draghi had said a couple of days ago. So no big deal. However, he was fretting \u201cabout the liquidity in the market, in particular under stress situations.\u201d<\/p>\n<p>Despite unleashing a deafening round of QE on the European markets, the ECB has watched helplessly as government bonds have done the opposite of what they should have done: Prices have plunged, and yields have spiked. The German 10-year yield soared in seven weeks from 0.05% to over 1% on Thursday, before settling down a bit. And it wasn\u2019t even a \u201cstress situation.\u201d<\/p>\n<p>US Treasuries have sold off sharply as well since the beginning of February, with the 10-year yield jumping from 1.65% to 2.31%, the worst selloff since the taper tantrum in 2013.<\/p>\n<p>Now one word is on the official\u00a0panic list: \u201cliquidity.\u201d They\u2019re\u00a0thinking about\u00a0the terrifying moment when it suddenly evaporates.<\/p>\n<p>Weber blamed central banks for the liquidity issues in the global bond markets. They\u2019ve been buying \u201cvast amounts of assets and putting them on their balance sheets\u201d; not just government bonds but also corporate bonds. Since central banks \u201cbuy and hold,\u201d they \u201ctake some liquidity out of the market.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Get Used to Selloffs, Central Bankers Say as They Fret about the Terrifying Moment When Liquidity Evaporates Axel Weber, president of the Bundesbank and member of the ECB\u2019s Governing Council until he quit both in 2011 to protest the ECB\u2019s bond purchases, quickly landed a new gig: chairman of UBS.\u00a0WHIRR\u00a0went the revolving door. From this [&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":[6120,6119,124,233,6121,282,1044,5414,1295,1029,4254,6118],"class_list":["post-8830","post","type-post","status-publish","format-standard","hentry","category-economics","tag-axel-weber","tag-bundesbank","tag-central-banks","tag-ecb","tag-ecb-governing-council","tag-european-central-bank","tag-mario-draghi","tag-market-liquidity","tag-revolving-door","tag-ubs","tag-wolf-richter","tag-wolf-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8830","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=8830"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8830\/revisions"}],"predecessor-version":[{"id":8831,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8830\/revisions\/8831"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}