The Fed’s RRP slush fund is now down 90% from its peak levels reached in Q1 of 2023. This month $144 billion has been withdrawn. Soon, the money will be gone. Then what.
I have forecast the draining of this facility from the time QT began. The Fed created this facility as a place for the excess funds to park, that were created mostly during the period when the debt ceiling was in place and T-bills were being paid down. At the same time, QE was still pumping excess cash into dealer, investor (via MMFs), and bank accounts. A massive tidal wave flowed in reaching $2.5 trillion at peak.
When the debt ceiling was lifted in April 2023, the Treasury began issuing T-bills again, and those holding the RRPs began to withdraw their funds to buy T-bills. This process was predictable and predicted by people paying attention. I was paying attention.
I had identified this as a slush fund that would be used to support asset prices when the Fed began QT. I warned years ago, that it would be used for that purpose. It has filled that role spectacularly. Now, the end is nigh. I continue to cover that process regularly, with some guesses about what to expect when Doomsday finally arrives.
Oh, what a surprise. The Fed is about to cut rates. Next, it will end QT. Only question is when they go back to buying all the Treasury issuance again.
It won’t be long until we find out. The Slush Fund is on schedule to reach effective zero, just as I forecast it would, when I forecast.
I have a new report in process for publication this afternoon (hopefully). Meanwhile, here’s the latest. Primary Dealer Clown Show Danger Pales in Comparison to Hedgie Daredevils
Meanwhile, the uptrend is intact on the hourly chart of the 24 hour ES, S&P 500 futures. The latest 5 day cycle projection of 5655 has been hit. A 2-3 day cycle projection of 5665-75 is still live, but we’re splitting hairs. They’re testing the all time high as a right. If they break through, strap in for another meltup. And if not, order some maple syrup for the waffles coming to your table. Stock Market Has Perfect Lineup for Fall Classic
For moron the markets, see:
- Stock Market Has Perfect Lineup for Fall Classic September 16, 2024
- Gold Gets Ready to Rumble 9/12/24 September 12, 2024
- Primary Dealer Clown Show Danger Pales in Comparison to Hedgie Daredevils September 11, 2024
- Swing Trade Screen Picks – Read My List, No New Picks September 10, 2024
- How Deep Was My Valley September 9, 2024
- Here’s Hard Evidence that the Slowing Economy Narrative is False September 8, 2024
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