Proceeding With Caution

Proceeding With Caution

Traders and investors (and those are two distinct types of market participants, as I'm fond of reminding folks on occasion) can expect to endure another week of incessant speculation about the path of bond yields and the evolution of Fed policy. Joe Biden's stimulus plan is in the homestretch, and when considered with an upbeat jobs report and sharply higher oil prices, the inflation warnings will be ubiquitous. As a kind of tangential aside, Brent crude is now above fiscal breakevens for some
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6 thoughts on “Proceeding With Caution

  1. Seems to me that the parameters of the oscillations of life – politics, investing, pandemics, computing , oil prices, social media influence and cryptocurrencies to name a few – are increasing in amplitude and decreasing in period. Is much of this volatility due to the injection of liquidity by central banks? Are subdued interest rates the only thing keeping it all from exploding.

  2. Good comment. There have been several articles in these pages regarding this question, often referencing Alexandr Kocic. The main takeaway, if I remember correctly, was that CBs actions dampened market volatility, but with nowhere else to “go”, it showed up elsewhere, e.g. in politics. And politics have been volatile indeed in the last couple if years. So maybe, with the reutrn of sanity we are seeing a reversal of this trend.
    As for your second remarks, probably “yes”.

  3. With no news from Powell on whether the SLR relief will be extended at the end of the March I think we are in for a choppy week. At the same time the US Treasury is reducing its outstanding treasury bill position by $922bn by the end of March, resulting in a further injection of liquidity. Interesting times and it would be interesting to hear Heisenberg’s views.

  4. ManofLourdes, you’re right, there are (still too many) trolls under bridges, yet the removal of the biggest troll of all did reduce political vol by a lot.

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