Last month (https://convex-strategies.com/2020/11/19/risk-update-october-2020/) we referenced a speech from Federal Reserve Vice Chair of Supervision, Randall Quarles, and noted that we should expect to see further formal policy papers coming out on the topic of ongoing support of levered Non Bank Financial Institutions (NBFIs). Well, courtesy of the Financial Stability Board (FSB), here it is and she’s a beauty! https://www.fsb.org/wp-content/uploads/P171120-2.pdf The 60-page note has some useful timelines on the events preceding, during and following the pandemic related market shocks of Q1 this year. It is effectively a 60-page justification of moral hazard inducing behaviour by central banks, and even self-identifies as … Continue reading Risk Update: November 2020 – Financial Stability Board points at the fragility.