• “Working against each other” has been a multi-year period of currency war.
  • The January upset in international markets, among other things leading to U.S. mortgage rates with in an inch of the all-time record low, was entirely due to a repricing of global growth prospects (down) and central bank reaction.
  • Central bankers talk with each other, in communications as secret as nuclear hot-lines. They try not to surprise each other, and do what they can for each other.

This week we got the usual run of ambiguous economic data and a no-action Fed meeting. Nobody expected the Fed to raise its rate, so all is ho-hum. But -- not ho-hum. Not at all. On the surface, in plain sight, a very big story, but too technical for normal media, and so either ignored altogether or published garble. I should know better, but ... here we go: After several years of working against each other, global central banks are cornered, forced to work in concert against every historical instinct. “Working against each other” has been a multi-year period of currency war. As structural economic weakness overtook both Europe and Japan, both the European Central Bank and Bank Of Japan bought time by weakening their currencies. Both also hoped that in the time bought, progre...