Equity markets are relatively straightforward to understand compared to the bond markets. In most of the developed countries bonds markets are bigger by orders of magnitude compared to the stock market. For example, in the US the total stock market cap is about $34 trillion but the bond market is over $41 trillion.
In fact the bond markets offer better signals about companies and the broader economy as a whole compared to the stock markets. But fixed income markets are incredibly vast and complex, they are like an ocean.
I recently heard this absolutely amazing podcast featuring Zoltan Pozsar. He is the Director in the Global Economics and Strategy research group at Credit Suisse and was formerly an adviser to the US treasury.
This is an absolute goldmine of info on all thigs money markets. You won’t understand everything at the first listen for sure and you’ll have to listen to it twice but, its worth it.
In this conversation Zoltan talks about:
- What do money markets mean
- What are carry trades
- How do institutional investors and traders take advantage of negative interest rates
- Why everyone is wrong about the yield curve inversion and why the 10 and 3 year inversion is no longer a reliable indicator.
- Why aren’t investors buying US debt
- How do money market rates impact fed funds rates band
- Impact of regulations on the structure and volumes of money markets. Basel 3, High quality liquid assets (HQLA) and more.
- How does the stress in repo markets affect the Fed’s decision to reduce it’s balance sheet size
and a whole lot more…