Yield Curve Steepening

[bart]

Someone proposed, (I think it was Alfredo) that the fed might raise rates but continue to pump up the m3.

Anyone starting to wonder if the hiding of M3 is part of an attempt by the Fed to let the air out of the housing bubble without risking a period of illiquidity? That is, while posturing as hawkish with regard to interest rates and having the real effect of putting the brakes on the real estate market, simultaneously opening the floodgates on M3

I thought that idea was very intriguing, but I have admit, I'm not sure how that would work exactly by imultaneously opening the floodgates on M3

If the fed did it via repos, wouldn't that impact the fed fund rate?

Here's the long term data, what do you think?
Personally, I believe that the only link is what the Fed wants.

[image]http://research.stlouisfed.org/fred2/data/RPNS_Max.png[/image]


[image]http://research.stlouisfed.org/fred2/data/DFF_Max.png[/image]

[blazespinnaker]

I have to be honest, but I'm not really a huge fan of using visual inspection of graphs for measuring mathematical correlation.

[bart]

I have to be honest, but I'm not really a huge fan of using visual inspection of graphs for measuring mathematical correlation.

I do track both of those stats and was able to whip up a quick chart:

[image]http://www.nowandfutures.com/download/repos_fedfunds.png[/image]

[Alfredo Dominguez]

How is your liquidity measurement affected by the absence of an "official" M3? Have you found a source for guesstimating the repo numbers and thrown them in with the other still published data?

[bart]

How is your liquidity measurement affected by the absence of an "official" M3? Have you found a source for guesstimating the repo numbers and thrown them in with the other still published data?

Both ways that I measure global liquidity aren't dependent at all on M3, same with almost all my charts.

I did locate a set of data on the Fed's H41 report just last week that may help with the missing repos, but it requires a huge block of time to extract the years of historical data so that I can test it. I may even be able to back into M3 too, but I sort of doubt it

I just haven't found the big chunk time yet.

[jeffolie]

The liquidity line leads the gold line. The ten year bond is a lagging or coincident indicator.

Both indicate a peak then decline in gold in the near future.