There was no need to choke off credit demand when the demand for credit was only sufficient to keep the average rate in the midpoint of the old range. This "rate hike" is a fraud. It is only for the idiots in the financial media who have been going on about a rate hike forever and the need for the Fed to protect its credibility by raising interest rates.
Natural-gas fell to the lowest ever inflation-adjusted price in its history of NYMEX trading on Wednesday as extremely warm weather continues to limit demand. As we recently explained, the glut in nattie is worse than that facing the crude complex, and while the glut in oil is expected to continue for the next year or so before balancing in late 2016, the pain for liquefied natural gas (LNG) could be just beginning. As one trader warned "this market is in real trouble...just wait for the bankruptcies."
In what appears to be an orderly process, The NY Fed's first Reverse Repo operation since The FOMC 'raised' rates accepted $105.185 billion of Treasury collateral from 49 banks at 25bps. This is being greeted as good news by many as no major disprutions appear to have occurred... aside from, of course, a 6bps plunge in long-end bond yields, 250 point drop in The Dow, and notable weakness in high-yield bonds.
Cynical short-sellers are targeting some of Wall Street's most famous short-sellers. Amid plunges in the stock prices of David Einhorn's Greenlight Capital and Dan Loeb's Third Point reinsurance entities, Bloomberg reports that bearish investors have piled in pushing short interest (as a percent of shares outstanding) to its highest since 2009.
The Fed hiked... and the Treasury market threw up all over it, flattening the curve over 10bps in the last 16 hours (to 9 month lows). The reaction screams "policy error" as rate cut odds for January remain above rate-hike odds. Financials - who will benefit greatly from this rate hike if all the talking heads are to be believed - appears not to have got the flattening curve joke yet.
Not exactly an overwhelming vote of confidence!!!
Smashing 2s30s back below 200bps to 9-month lows...