Reasons for the growth of the ruble

[Dekster]

Independent? It's part of the government.

Then you should know that their buyin $120B a month in treasuries is $120B a month added to the money supply.

 

[Toddsterpatriot]

Then you should know that their buyin $120B a month in treasuries is $120B a month added to the money supply.

Yes. And?

 

[DarthTrader]

The bond discount shows that Ruble is in high demand. Because anyone with half a brain knows Putin is about to really bend EU over the humility counter and make them take the knee....or something.

 

[DarthTrader]

Then you should know that their buyin $120B a month in treasuries is $120B a month added to the money supply.

That's not how QE works.
But recently the US did add $4.8 Trillion in never before done "helicopter" money. So yes there is monetary inflation, but not because of QE.

 

[Dekster]

That's not how QE works.
But recently the US did add $4.8 Trillion in never before done "helicopter" money. So yes there is monetary inflation, but not because of QE.

When the fed buys anything, it is putting money in circulation, or as they prefer to call it, "liquidity"

 

[DarthTrader]

When the fed buys anything, it is putting money in circulation, or as they prefer to call it, "liquidity"

Liquidity and money are two different things when trying to bet on inflation. Inflation is a monetary phenomenon, liquidity is an agreement backed by assets which some of it can be money.

Treasuries themselves are not money but are "as good as money" and that's where people tend to fail....if you bet that QE would have caused inflation starting in 2008, you'd have waited 14 years before that bet even began to start to pay....quite a terrible return on investment.

 

[Toddsterpatriot]

The bond discount shows that Ruble is in high demand.

What bond discount?

 

[DarthTrader]

What bond discount?

If I understand it correctly, whenever a Bond's market yield is less than the coupon yield it is trading at a premium (Russia) and whenever the market yield is higher than the coupon it's trading at a discount.

Over simplification perhaps, but useful distinction, because it isn't a notition of weakness or strength, it's a statement of supply and demand.

Right now there's an oversupply of US Treasuries. Rising Rates lowers the amount of credit demanded, and thus too many treasuries, hence the US Treasuries have traded at a discount. Their yields are very high compared to the actual Fed Funds rate. Whether or not that translates to the exact coupon or not is not something I care to look-up, in the US the funds rate, the repo rate specifically, drives the supply and demand curve for treasuries.

So I'm equivocating the Russian result being that their bonds trade at such a lower yield to their own official rate, that suggests a high premium.

12% (market rate) vs. 20% (coupon rate)

Means people cant get their hands on Russian bonds fast enough.

 

[DarthTrader]

What bond discount?

Also I notice by saying "bond discount" I am being confusing, Russia is a premium. I either misspoke entirely or was trying to simply use a common term such as "par value". Bond vocabulary isn't my forte....I pay attention to it to gauge commodities, but other than that I don't mess with credit investments.