Macro Liquidity Pro Trader

Analysis of the major forces of macro liquidity that drive markets. Click here to subscribe. Subscribers, click the post headline to access reports.

Cash Destruction Not Yet Showing Up In Banking Indicators, But It Will

The macroliquidity indicators this week do not show any sign that a significant change is at hand. Yet, we know that plunging commodities, emerging markets, and leveraged junk bond markets are destroying cash. That should begin to show up in these indicators, particularly in bank deposits, in the weeks ahead.

Fed’s Balance Sheet Liabilities Little Changed, Treasury Cash Falls

The Fed’s liabilities rose slightly last week mostly due to incidental items, with no material impact overall. The Fed did a 7 day Term Deposit Facility Operation at 1 basis point above the interest rate on excess reserves, which pulled $43.8 billion from regular reserve deposit accounts into term deposits. The Treasury spent $22 billion…

Bulls Are Overeating The Thanksgiving Turkey, But They’ll Be Puking Next Week

The recovery rally in stocks in October was a direct result of Treasury paydowns, which was a temporary effect. That has been reversed as the debt ceiling was raised and the Treasury returned to the market with a vengeance, pounding it with $310 billion in net new supply since the end of October. $100 billion…

Fed Balance Sheet Semi Tight as Treasury Pulls Cash From Markets

With Treasury paydowns ending that week, and the Treasury returning to the market to claw back big chunks of the cash it had injected into dealer and other accounts over the past couple of months, next week’s Fed H41 data should start to reflect that. The Treasury account balance should grow, and bank reserve accounts…

The Most Important News Today – Treasury announces 69-Day Bill- The Clawback Begins

This is even more important than the FOMC announcement. Now that the debt limit deal is all but signed, sealed, and delivered, the Treasury will begin to claw back some of the $140 billion in cash it paid to dealers and other investors who held expiring 4 week bills, and maturing 2 year notes that were not rolled over since September 15,