I admit that I watched last night’s last minute press conference hoping for something spectacular from U.S. president Joe Biden: an announcement that he was leaving the race. The first few words from his lips and I figured that Mr Biden was opting to continue on the road to the presidency. Mr Biden took the opportunity to … Continue reading It is as if the markets expected a Biden gaffe…
As of 8:39 am, at a strike price of 1.0875, the monthly call options for the EUR/USD were out of the money given the market price of 1.074. Call options on the underlying EUR/USD futures were also out of the money with futures on the currency pair quoted at 1.07655. The opposite holds for owners of … Continue reading At 8:39 am, are EUR/USD FX options out of the money?
I liken the Democratic and Republican parties as two major management companies pitching their management styles as the best one for managing the political economy. Political campaigns between Democrats and Republicans are public battles over whose philosophy and narrative should be allowed to guide the nation-state. As “privateers” for the political economy, banks and their trading … Continue reading How the Democratic and Republican philosophies differ on managing the value of the currency.
The State sanctions a market for its currency and licenses private actors to buy and sell the currency. A market is a public, social program created to generate the transactions that lead to taxable revenue. Private actors participate in the program in exchange for the right to earn interest and trading income from the spreads between bids … Continue reading In the end, banks are merely privateers.
At times I think that traders and bank depositors operate in sandboxes oblivious to the rest of the playground that surrounds their play area. The media offers enough noise to distract market participants from the philosophy that orders the interaction between the State, the banking system, and transactional markets. I consider banks to be the retailer of … Continue reading The Court’s role in supporting monetary policy.
Today’s rates …. 30-Day Federal Funds Futures: 94.69. Effective Federal Funds Rate: 5.33%. Interest on Reserve Balances: 5.40%. Discount Window: 5.50%. CME FedWatch: 96.8%. EUR/USD=1.0931. GBP/USD=1.2594. USD/JPY=149.6608. (Foreign exchange rates as of 7:38 pm EDT.) Today’s definition … Federal funds rate-the interest rate at which depository institutions lend reserve balances to other depository institutions overnight. … Continue reading What is the federal funds rate? Should the Fed worry about not meeting its mandates under law?
Today’s rates … 30-Day Federal Funds Futures: 94.70. Effective Federal Funds Rate: 5.33%. Interest on Reserve Balances: 5.40. Discount Window: 5.50%. EUR/USD=1.0923. USD/JPY=149.4885. Today’s definition …. interbank market– “The interbank market is a global network utilized by financial institutions to trade currencies and other currency derivatives directly between themselves. While some interbank trading is done by banks on … Continue reading Interbank market: Federal Reserve rates for a holiday shortened week and Fed clarity.
The takeaway … I like to take a common man approach to understanding what is happening at the Federal Reserve, at least I try to. We hear all the academic and political explanations for why the Federal Reserve System exists, how it came about, etcetera, etcetera. Last night during the GOP presidential primary debates held … Continue reading Federal Reserve’s true dual mandate: No central bank in its right mind wants to reduce inflation.
The takeaway … Back on 25 October 2023, the Board of Governors of the Federal Reserve System voted to reduce the cap on the interchange fee, a fee received by debit card issuers. 12 CFR 235.2(j) defines the interchange fee as “any fee established, charged, or received by a payment card network and paid by … Continue reading A reduction in the interchange fee cap may not hurt debit card transactions activity….
Lawyers Write the Bets. Bankers Sell the Bets. 