The International Monetary Fund’s annual meeting concluded in Lima, Peru on Sunday and the reports say that many third-world central bankers want the Federal Reserve to raise rates, despite the pain it may cause globally.
This is in contrast to what IMF chief Christine Lagarde has said many times recently.
Remember, Lagarde’s background is in the derivatives market. She — unlike the central bankers surrounding her in Lima — has an intimate knowledge of the “if, then” scenarios in the hundreds of trillions in notional value riding on a rate rise.
She knows there are many other shoes to drop on the rate rise and she is not quoted as saying the Fed should get off zero.
I believe this is why the Fed stood pat in Sept. and will do so later this month. It has more to do with the great unwind that will occur once the Fed moves.
So markets are entering this week with a renewed vigor of beating down the dollar.
The greenback is just off 6-month lows and the 10-year note is trading at 2.08, after going below 2 percent earlier this month.
Commodities prices have rebounded slightly on the weakening dollar, to the slight benefit Glencore, the metals and mining firm caught in a commodities derivative death spiral.
However gold prices are quietly up $60 an ounce since the end of July, which is divorced of currency strength and has a trade of it own.
The gold trade is how central banks measure their actions. Depressed prices mean investors favor their actions, as well as the converse.
We won’t get into the price manipulation by central banks, which occurs as well to sway market sentiment.