Money and The Fed

Reports on the Fed and Treasury, primary dealers, foreign central banks, money market and mutual fund flows, and other factors that affect market liquidity

Surging Liquidity Keeps Playing Field Tilted

Composite Liquidity - Click to enlarge

The composite liquidity indicator surged to another new high last week. That was not enough to stop a sharp selloff in stocks. But when the Fed’s monthly MBS purchase settlements began on April 10, that stopped the bleeding. While there have been a number of ominous technical signals in the charts of stock prices and cycle indicators, strictly on the basis of the liquidity trend, I am forced to conclude that this was just another instance of the dealers shaking out some inventory before marking them up and distributing them again.

Time For Market To Put Up, or Me To Shut Up

I’ve been talking about the huge paydowns of outstanding Treasury debt coming in April that should boost both stocks and bonds. I also pointed out that extremely strong withholding tax collections meant that supply could be even lower and paydowns even larger than the TBAC forecast. That has already begun to play out. Now it’s…

Look Out! Massive Treasury Paydowns Are Almost Here

Withholding tax collections continue to be very strong suggesting lighter than expected Treasury supply and huge paydowns of outstanding Treasury debt in April that should boost both stocks and bonds. But beware, Primary Dealers are in distribution mode… Table of Contents Treasury Auctions Week Just Completed Week Ahead Treasury Auction Takedowns By Investor Class Primary…

February Federal Budget Defecates Least Since 2007 – Could Be Incendiary

The US budget deficit is at its widest every February as tax collections are slow and tax refunds are huge. This February the deficit was the smallest since February 2007, when collections reflected 2006 activity, the last year of the housing and credit bubbles a few months before the economy began to contract. This year, tax collections, particularly withholding taxes,…

Something Evil This Way Comes

Foreign central banks withdrew a record amount of the Treasury and Agency holdings from their accounts at the Fed this week. What that means is not clear, but it’s almost certainly not bullish. Table of Contents Treasury Auctions Week Just Completed Week Ahead Treasury Auction Takedowns By Investor Class Primary Dealer Trading Foreign Central Banks…