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Category: Liquidity Trader – US Treasury Market Trend Supply and Demand

Analysis of new Treasury supply and major demand market segments to estimate market liquidity impacts for bonds and stocks. Resulting market strategy recommendations. Click here to subscribe. Now published at Lee Adler’s Liquidity Trader.

The Stimulus “Magic Bullet” Is Bearish

Withholding tax collections were relatively stable through November. But the 5 day average ticked a hair below November’s low here in early December. New lows would suggest that December’s jobs data will be awful, which will add to the likelihood of more stimulus, both fiscal and monetary. Whether that’s bullish or not depends on the Fed. The wrong fiscal/monetary balance could ignite a conflagration.

The Big Dealer Leverage Brainfart

Sometimes the mouth goes faster than the brain.

I chat with Lindsay Williams on his Strictly Business Podcast, once every couple of months. When I spoke with him on Thanksgiving Day I said something that I immediately realized was wrong. I said that there’s no way to know how leveraged the Primary Dealers are in their bond portfolios.

Of course, that’s wrong.

Why No More Pandemic Spending Is Bullish

The economic rebound from the depths of the pandemic panic in April and May has ended. The economy may be rolling over again. Bad news for workers and consumers, but not necessarily for investors.

The US Government did no pandemic relief spending in August, and none is on the immediate horizon. Despite that, the monthly budget deficits are freaking enormous and frightening.

Tax receipts are weak and they will provide no relief from those deficits. The US Treasury will continue to borrow massive amounts of money in the markets.

Sounds like bad news for the stock market, right?

Eh, not quite.  Here’s why.