Robert P. Balan

Managing Owner and CIO, Predictive Analytic Models (PAM)

Robert P. Balan runs Predictive Analytic Models, #1-rated trading unit at Seeking Alpha. PAM trades Swiss HF funds using Federal Reserve, US Treasury, and term (money) market liquidity data flows as basis for trading decisions. He is domiciled in Zurich, Switzerland. Robert Balan 5 decades of ...more

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2021 Outlook For The Long Bond Yield, Equities And The VIX

3 years ago

Thanks a lot for kind sentiments. Bill

The Equity Market Outlook Until The First Half Of December 2020 Is Not A Pretty Sight, Liquidity-Wise

4 years ago

Yes, I was told that Carl. Busy making money, but will write more.

The Equity Market Outlook Until The First Half Of December 2020 Is Not A Pretty Sight, Liquidity-Wise

4 years ago

Welcome, and thanks for the kind thoughts Susan

'We Have Lift-Off': Yields Lead The Charge Higher; Load Up On Equities, Exit Gold Longs, And Sell US Dollars

5 years ago

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Repo rates go up when bank reserves fall because the reserves are being used as collateral in inter-bank lending. See the chart provided above. The reserves are not being lent out. Having little collateral is just like raising rates, and usually that is what happens with the dearth of collateral.

That depends on the context of what Dimon was saying, Rising rates USUALLY steepen the yield curve, and that helps the loan portfolios of banks, not hurt them. You understand of course that banks borrow short and the lend long, so rising rates improves their Bet Interest Margin income.

#What if treasuries, the collateral of choice in derivatives markets, lose too much value too quickly#

Just what hypothetical case of how much yield rise are you talking about and in what time frame? Of course for your fears to be realized the rise in yields, to be disastrous, have to really very high and very rapid. The 10 yr yield fell from the 8 November top of 3.3 to a low of 1.47 in less than a year, but the stock market went to new highs. One can always invoke hypothetical cases. but how realistic is your scenario? Its hard to argue against hypothetical cases because they have never happened. Give me a concrete situation, instead of a hypothetical question, otherwise we will be debating this issue for some time.

In this article: SPX, BITCOMP, UGAZ

'We Have Lift-Off': Yields Lead The Charge Higher; Load Up On Equities, Exit Gold Longs, And Sell US Dollars

5 years ago

Thanks for the comments Gary. In this case, rising yields are associated with rising bank reserves, so that means funding costs (term market rates, e,g, repo) will still be falling. It is easy and cheap enough to get funding from the term (money) market without resorting to margin calls.

In this article: SPX, BITCOMP, UGAZ