#Weekly #Review - Financial Markets & Economics: Commentaries by Fabian Wintersberger

It has been a calm week on financial markets more or less, equity and bond markets rose slightly and commodity prices corrected a bit, apart from energy, where prices continued to pick up.  However, I was more interested into another topic this week, a topic I mentioned briefly in previous texts, namely the US repo market. Since the beginning of May the number of overnight reverse repose with the Fed rose at an 8 % rate and on Wednesday reverse repos with the Fed reached November 2016 highs ( on Thursday they reached an all-time high ). Why is this happening & what are the conclusions on that? In this commentary I try to find answers. Firstly, I want you to think back to September of 2019: Back then, the opposite of what is happening today took place. There was lack of liquidity and the Federal Reserve had to pump hundreds of billions into the financial system to keep rates down at the short end of the curve. Banks and other financial actors needed cash and therefore engaged on...

This week was a little bit turbulent for all markets, not only within the crypto-space, but also equity markets got a little bit shaky, although they managed to hold their high level more or less. Both topics I want to discuss a little in this weekly review. However, I want to start with one of the most discussed topics of the past months, namely the global shortages in commodities and other consumption goods. Because of the global reopening the demand for some goods and services is accelerating while global supply chains have still not fully recovered.  Bloomberg summed up the situation as follows :  Mattress producers to car manufacturers to aluminum foil makers are buying more material than they need to survive the breakneck speed at which demand for goods is recovering and assuage that primal fear of running out. The frenzy is pushing supply chains to the brink of seizing up. Shortages, transportation bottlenecks and price spikes are nearing the highest levels in recent me...

This week I want to write about three topics which caught my attention since last Friday. Firstly, there was the really, really bad jobs-report from Friday. Secondly, Christian Broda and Stanley Druckenmiller have published a commentary in the Wall Street Journal, stating that the Fed is playing with fire  and thirdly, big inflation numbers from this Wednesday.  The US Jobs Report Expectations have been high last Friday: Economists expected very good job numbers because of the tail wind from the grand reopening  and that people are returning to normal life. Consensus estimated 1 million additional jobs, Aneta Markowska from Jeffries even estimated 2.1 million jobs. In the end, the US economy added 266 thousand jobs in April, Markowska has roughly miscalculated by a factor of TEN. Instead of an unemployment rate of 5.8 %, unemployment still stayed above the 6 % level (officially). The labor force has grown by 430,000 in April, with 102,000 looking for work and 328,000 wit...

The discussion about price inflation will not stop, but not because those who warn about central bank policies talk about them. Instead it is central bankers who talk about it everytime and try to calm markets. Transitory   inflation  is the mantra, which is repeated daily. This week Fed-officials Barkin and Williams have come out and said that price increases will be transitory and all will be calm again next year. From the ECB side there has been Philipp Lane, who said that inflation will get back to low levels after a temporary rise. I don't see it. I just don't see it, Lane said at the Official Monetary and Financial Institutions Forum . Besides endless repeating that inflation will be transitory, the other topic that central bankers talk about these days is the job market, where we are still far, far away from full employment. According to Barkin, Williams, Lane and others only a tight labor market can create substantial inflation... I wrote about the current phenomenon...