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Reverse Repo is Bond Bullish

When money is deposited into an interest-bearing account at a large commercial bank, the bank is obligated to pay interest on the customer’s deposit. To generate the interest, the commercial bank can either lend against the deposit, up to nine times or purchase an interest-bearing asset with the deposit. There is currently an insufficient number … Read more

Market Brief – Friday 7/30/21

Stocks fell in overnight trading, largely due to Amazon’s stocks falling after its earnings announcement yesterday, and other than a brief buying spurt, stocks were headed lower in early trading. Treasury yields fell in overnight trading despite heavy selling over the past couple of weeks and yields were heading lower in early trading. The Fed’s … Read more

Market Brief – Thursday 7/29/21

Stocks rose in overnight trading and surged higher in early trading as investors celebrated a continuation of easy-monetary policy despite their demands for the Fed to tighten. Treasury yields rose in overnight trading, giving back all of yesterday’s decline but buyers were trying to reverse the move in early trading. Initial claims fell to 400k, … Read more

Market Brief – Wednesday 7/28/21

Stocks and Treasury yields rose in overnight trading. Stocks struggled in early trading while Treasury yields fell slightly. Mortgage applications rose +5.7% last week as purchase applications fell -1.6% and refinance applications rose +9.3%. The Department of Energy reported crude oil inventories as Crude: -4.089mm (-2.928mm expected), Cushing: -1.268mm, Gasoline: -2.253mm (-916k expected), and Distillates: … Read more

Market Brief – Tuesday 7/27/21

Stocks fell in overnight trading following an ugly session in China which sent Chinese stocks sharply lower for the second straight day. Treasury yields also fell in overnight trading with 30-year Treasury yields holding at 1.90% ahead of today’s auction. Both stocks and yields remained lower in early trading. Durable goods new orders missed expectations … Read more

Market Brief – Monday 7/26/21

Stocks were flat in overnight trading and up slightly in early trading as investor enthusiasm to take stock prices higher is waning today. Treasury yields fell in overnight trading but investors wanted none of that as they sold yields back up to Friday’s closing level. New home sales fell -6.6% in June for the third … Read more

Nationalization of Money Markets

At the current pace, it is likely the Fed could nationalize the entire money market system through its Overnight Reverse Repurchase Program (ONRP). The Fed’s hostile takeover of money markets is not a reason to panic if you have money market accounts. The implications of the Fed’s actions are not due to a structural problem … Read more

Market Brief – Friday 7/23/21

Stocks rose in overnight trading and continued higher in early trading. Treasury yields reversed yesterday’s decline in overnight trading and were fighting to hold their overnight reversal. The preliminary Markit Manufacturing PMI showed the manufacturing sector is expanding at a slightly faster rate in July while the Services PMI showed the services sector is expanding … Read more

Market Brief – Thursday 7/22/21

Stocks started the day slightly higher but were unable to gain much traction in early trading as small caps were heading lower. Treasury yields were flat in overnight trading and heading lower in early trading. Initial claims rose +419k last week and total claims, including all forms of Pandemic Unemployment Assistance, fell -1.262 million to … Read more

Market Brief – Wednesday 7/21/21

Dip buyers continue to be rewarded for their efforts as stocks rose in overnight trading. Treasury yields also rose in overnight trading, with 30-year Treasury yields moving over 1.9% as sellers double down on their inflationary bets. Mortgage applications fell -4.0% last week as purchase applications fell -6.4% and refinance applications fell -2.8%. The Department … Read more