There’s still plenty of “risk-off” liquidity around to fuel demand for short term Treasury paper, but the “risk-on” liquidity that had supported demand for longer term risk assets is dwindling and a supply problem will only grow in the months ahead. Here’s how it all shakes out.
September was a blockbuster month for Federal tax collections. The US Treasury continued to pile up cash. Here’s what that means.
The macroliquidity indicator continues to flatten as the Fed stays the course of reducing outright securities purchases. Several component indicators are on the cusp of breaking the long term uptrends in force since 2009 or 2010.
Treasury supply was light this week with just the weekly bills. There was a paydown of $14 billion on Thursday, which helped to stabilize the market after it was hit with heavy supply at the end of September.
The great economic philosopher, Professor Lawrence Y. Berra, said, “In theory there’s no difference between theory and practice but in practice there is.” That being said, I have a theory about what’s driving the new dollar bull market and why that could “in theory” be bullish for US stocks and bonds, at least in the…
The US Treasury continued the dramatic increase in its cash balances in the past week.
Commercial banks, foreign central banks, Primary Dealers and the public all cut back on their bond purchases in the last week or two.
The Ali Baba offering sucked cash out of the accounts of US investors this week and new Treasury supply will take more on Tuesday.
In spite of reduced Fed support, and except for a challenge at the end of September, the markets will be on easy street from a supply perspective for the next 4-5 weeks. Here’s what to look for and why.
With QE virtually ended by year end and a low level of MBS purchases going forward, especially if bond yields increase, the markets will be getting insignificant assistance from the Fed. However, that will not be the case with the world’s other major central banks all of whom pump funds into the same worldwide liquidity…