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In An Unexpected Outcome, Trump Tax Reform Blew Up The Treasury Market

Over the past week we have shown on several occasions that there once again appears to be a sharp, sudden dollar-funding liquidity strain in global markets, manifesting itself in a dramatic widening in FX basis swaps, which – in this particular case – has flowed through in the forward discount for USDJPY spiking from around […]


In An Unexpected Outcome, Trump Tax Reform Just Blew Up The Treasury Market

Over the past week we have shown on several occasions that there once again appears to be a sharp, sudden dollar-funding liquidity strain in global markets, manifesting itself in a dramatic widening in FX basis swaps, which – in this particular case – has flowed through in the forward discount for USDJPY spiking from around […]


Global Liquidity Crisis Is Over… Dollar Shortage Suddenly Disappears

Remember last week when the world was desperately willing to pay excessive spreads to get their hands on dollar liquidity (the worst liquidity crisis since the European crisis)…   Well that's all over now! EUR-, JPY-, and GBP-cross currency basis swaps have suddenly snapped higher (less negative) as dollar liquidity is suddenly not a problem […]


There’s Never Been A Worse Time For A European Investor To Buy US Treasuries

Since the common currency's inception in 1999, the EUR-hedged yield 'offered' to European investors from investing in US Treasuries has never been worse… As Bloomberg notes, for European investors using swaps to protect against currency swings, the benchmark 10-year U.S. yield fell Friday on a euro-hedged basis to around -60bps. In other words, it costs […]


Who’s Next? Venezuela’s Collapse Puts These Nations At Risk

"It's a wake-up call for a lot of people who will say ‘Look, the stuff I own is actually very risky'…" warns Ray Jian, who oversees about $6 billion at Pioneer Investment Management Ltd. in London. "People have been ignoring risks in places like Lebanon for a long time," and the official default of Venezuela […]


Greece Plans 30 Billion Euro Debt Swap As It Prepares For The End Of Bailouts

Greece is planning a 30 billion euros debt swap which will convert 20 existing bonds into 5 (or less) new issues in the next few weeks (although the exact timing remains uncertain). The bonds are expected to have similar maturities to the existing notes from 2023-2042. According to Bloomberg, the Greek government is planning an […]


Why US Tax Reform Will Put Even More Pressure On Dollar Funding Markets

On Wednesday, we noted the renewed tightness developing in dollar funding markets. Ignoring embryonic signs of stress in the financial “plumbing” can be dangerous. The divergence of LIBOR from Fed Funds on 9 August 2007, which occurred two months prior to the peak in the Dow, always comes to mind. Fast-forwarding to the present when […]


Global Debt Bubble Understated By $13 Trillion Warn BIS

Global Debt  Bubble Understated By $13 Trillion Warn BIS  – Global debt bubble may be understated by $13 trillion: BIS– ‘Central banks central bank’ warns enormous liabilities have accrued in FX swaps, currency swaps & ‘forwards’– Risk of new liquidity crunch and global debt crisis– “The debt remains obscured from view…” warn BIS Global debt may be under-reported by […]


BIS Finds Global Debt May Be Underreported By $14 Trillion

In its latest annual summary published at the end of June, the IIF found that total nominal global debt had risen to a new all time high of $217 trillion, or 327% of global GDP… … largely as a result of an unprecedented increase in emerging market leverage. While the continued growth in debt in […]


“Leading Indicator Of Potential Weakness” Looms In Corporate Credit Markets

While credit spreads are broadly-speaking unmoved by recent chaos, signals are emerging that investors are starting to get worried about the $7.2 trillion U.S. investment-grade bond market. Bloomberg's Lisa Abramowicz points out that bond buyers are starting to show some signs of unease, with traders are increasingly turning to derivatives to hedge against potential losses. […]