The Federal Reserve's H8 report details the assets and liabilities of commercial banks. The latest data shows deposit flight to higher-yielding options continues.... Read More
For the first time this hiking cycle, the funds rate has reached the market's expected terminal rate. This suggests the hiking cycle is over. If the Fed is done hiking because they broke something with their aggressive campaign, as they have done in the previous cycles, it is a disastrous time to own stocks.... Read More
The catalyst for a problem is often unanticipated. In the case of the latest banking crisis, the public's "discovery" of higher rates outside their bank accounts was one such catalyst. As deposits left banks for money market funds, banks were caught off guard. The adoption of mobile banking might have changed banking forever.... Read More
With only two days to go until the next FOMC meeting, traders are still not sure what to expect from the Fed. Since forward guidance began in 1994, there has not been a meeting with this much uncertainty so close to the meeting.... Read More
The $300 billion surge in loans by the Fed to banks, increasing its balance sheet so much it reversed half of all quantitative tightening in the last year, is a worrisome signal that deposit flight from regional banks is in full bloom. If not reversed in the coming days/weeks, it will lead to a credit crunch that will impair the economy.... Read More
A look at outstanding amounts of Treasuries, corporates, agencies, munis and open market paper... Read More
The amount of outstanding private credit in the U.S. experienced a brief decline during the financial crisis, but government debt grew throughout the entire period. Both are now at new highs.... Read More
Private pension funds have much smaller funding gaps than their government counterparts.... Read More
Defined benefit plans continue to be replaced by IRAs and defined contribution plans.... Read More
Over the past couple quarters, households' real estate equity actually surpassed stock ownership.... Read More
Roughly 45% of FDIC deposits in the U.S. are uninsured.... Read More
First Republic is looking into a potential sale. This brings into question whether other regional banks are still at risk of losing deposits. These banks are critical sources of lending in the U.S., so any sustained loss of deposits would have a material effect on the economy. A hike in deposit rates and further FDIC assurances could help stem the outflows.... Read More
First see the charts below. This wild gyrating of the probabilities this close to a meeting is without precedent. NO ONE has a road map for this, including the Fed. So, what do they do next week? Let me offer... Read More
The 2-year is down 44 bps over the last two days (since Wednesday’s close). Only five other days in the last 40 years have seen a larger two-day moves. Oct 20, 1987 = the day after the largest stock market crash... Read More
Bank deposit rates have been too low relative to other higher-yielding options. That was not a problem until depositors began to move money out of the banking system for these higher-yielding instruments. The fix - raising deposit rates - would hinder profitability.... Read More
Homebuyers enjoyed a relatively affordable market in the decade following the housing crash. The recent rise in prices and mortgage rates put homeownership out of reach for many prospective first-time buyers.... Read More
There has been a notable shift in attitudes toward cash as rates continue higher and traditional investments such as equities and bonds have underperformed.... Read More
Risk can not be destroyed, only transformed. Understanding the mechanics of 0DTE on an intraday basis can give insight into understanding risk in a new market envoirnment. ... Read More
0DTE options have become a focus for market participants trying to understand where risk lies. Looking at the derivatives market and how these options are traded is a crucial first step. ... Read More