Liquidity indications were mixed this week, with the Fed still not doing much while foreign central banks were net sellers (see Treasury update). Commercial banks at least stopped dumping Treasuries but they are liquidating their trading accounts. The big plus was again bank inflows although they were not at the panic levels seen last week.
I’ve illustrated the massive outflows out of Europe into the US system by means of charting the deposit flows out of US subsidiaries of foreign banks. It is clear that European banks are suffering massive outflows and that this is resulting in huge inflows into US bank deposits. Some of these inflows are coming via the conduit of securities purchases, particularly Treasuries, but on occasion, such as Monday, stock purchases.
The overall liquidity trend has been uptrending at a snails pace since April, attributable almost entirely to these bank flows. “Slightly uptrending” is not sufficient to keep the markets levitated, given the constant pressure of new Treasury issuance (not to mention corporate and municipal) but it is enough to keep them from collapsing as long as these flows continue.
Click here to download complete report in pdf format (Professional Edition Subscribers) including 90 pages of charts and clear, cutting edge analysis that you can use to gain an edge in the market. Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. 30 day risk free trial for new subscribers. Click here for more information.
Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd. Click this link and begin your risk free trial NOW!
Enter your email address in the form to receive email notification when Professional Edition reports are posted.