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US Treasury Carpet Bombs Markets with $288 Billion This Week

The US Treasury will bomb the markets with $288 billion in new supply over the next 7 days.

This supply hits a market where structures are still collapsing and burning despite the Fed’s rescue programs. Those programs only exacerbate and prolong the causes of this disaster: Endless free credit, excessive leverage, complicated financial engineering, and infinite moral hazard.

Liquidity moves markets!

Follow the money. Find the profits! 

How can anyone expect this not to end badly?

Here’s the Treasury supply schedule for last week and next.

Date Security Type Total Offering Total Publicly Net New Cash or
Held Maturing (Pay Down)
4/3/2020 Bills $45,000 $0 $45,000
4/2/2020 Bills $193,000 $80,035 $112,965
4/1/2020 Bills $45,000 $0 $45,000
April Running Total $202,965
3/31/2020 Bills $170,000 $93,517 $76,483
3/31/2020 Coupons $125,000 $82,478 $42,522
3/27/2020 Coupons $18,000 $0 $18,000
3/26/2020 Bills $110,000 $105,888 $4,112
3/24/2020 Bills $110,000 $88,992 $21,008
Total Since March 24 $365,090

 

The Fed has been sending up $110 billion a day or so in anti-aircraft fire, but so far, the bombs are inflicting more damage than the Fed is preventing. The S&P has lost 45 points since last Wednesday.

That’s not all. The 13 week bill rate rose 12 basis points today. Other bills were stable, but the increase in the rate on this bill is a warning sign that the market will not be able to digest this barrage of paper without more dislocation, even with the Fed buying all of it and then some.

11 years of free money and QE built too much leverage into the system. As the bubble expanded it became increasingly fragile and brittle. It is still in the process of disintegration and collapse.

To better understand what the Fed and US Treasury’s actions ultimately mean for your investments and trading strategy, join me at Liquidity Trader. I’ll give you the lowdown there on what it means and how to position yourself to preserve your capital.

The Charge of the Light Brigade

The Fed injected around $600 billion into the markets and the banking system last week. That’s about $2,000 for every American, and it was just one weekly installment. All in the valley of Death rode the 600. We are the 600 and the Fed is leading us into the valley of Death.

Meanwhile banking indicators suggest that the sickness is getting worse, not better.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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