📉 What’s Happening?
- Dealer bond holdings have surged to record levels – Just as yields look set to rise.
- Repo market stress is flashing red – A sign that leverage has reached unsustainable levels.
- The debt ceiling wildcard – Temporary relief or the calm before a liquidity storm?
🔍 Key Takeaways:
✔ Extreme repo swings indicate liquidity stress—just as in past crises.
✔ Dealers are forced to fund Treasury supply at an accelerating pace.
✔ A liquidity crunch looms if borrowing outstrips collateral capacity.
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