Will Treasury and banks utilize RRP to help raise liquidity at the US Treasury
The DXY after catching a rally off a 4-Hour Bullish Butterfly, has reached my price target of $103, and if it gets above that zone, then I think the DXY will have plenty of room to make multi-decade highs due to The High Interest Rates, Tightening Credit Conditions, and The Deflation that is now being priced into the US Bond Market. If things go as expected...
The TLT has broken down an Ascending Broadening Wedge and given us one Bearish Confirmation back test; now we are looking for a second lower high within the range of the breakdown to truly get convicted on the move. However, for the time being, I do think this chart should be watched, as I have a suspicion that a lot of the shorter- and midterm bond yields are...
Money that is being parked at the Feds Reverse Repo Facility due to attractively high interest rates the fed has set for money parked at the facility has been on a steady decline since late 2022 and we have now confirmed a lower high and are looking to break down below a Bearish Dragon trend line that could be the initial trigger that gets it started to going down...
Top chart shows the RRP yield and US01MY. Bottom view shows the RRP. The theory is that, if the RRP yield is attractive, money will flow into the RRP from bills. When RRP increases, Net Liquidity decreases. (Dowwward pressure in the market.)
Everyone is a good trader in a bull market, but in a bear market, these good traders are reduced to hopium-fueled twitter analysts watching core CPI and interest rates. The former and latter data points serve nothing more as useless, out-of-context generalities for the single-celled Wall Street Bet retail enjoyer. But recent activity across the pond has sparked...
These are based on Max Anderson's Net Liquidity model. The formulas for each band are: (FRED:WALCL-FRED:WTREGEN*1000-FRED:RRPONTSYD*1000)/1000/1.1-1625 + 350 (FRED:WALCL-FRED:WTREGEN*1000-FRED:RRPONTSYD*1000)/1000/1.1-1625 - 150
In 2008 the U.S. central bank purchased $1.25 trillion in mortgage-backed securities $200 billion in agency debt $300 billion in long-term Treasury securities 2008 was named QE1 and would continue for the next 6 years before the FED paused and eventually began to tighten. During times of QE, banks, companies, markets all perform great. There is...
The FED Reverse Repo facility has been growing at almost exactly the same pattern the EURUSD has been dropping. This chart compares the overlay of the RR account and 1/EURUSD growth (EUR withdrawals). This could be interpreted as EUR risk off play.
Reverse Repurchases are a clear indication of excess liquidity in the Banking / Financial System. Money Center Banks have monies in excess after meeting obligations to the following: Liabilities Investments Lending An increase in the Reverse Repurchase activity will decrease the money supply. Reverse Repurchases mean that commercial banks are provided...
A picture is worth 1000 words. Horrific dependency on FED Prop. Nullified
Duress is everywhere. There is no escape, while the demand for Collateral increases the Rate of Demanded Collateral continues to Rise in Yield. Interesting Times indeed. For those trading "Conventional Paradigms" ... Please check your Six. The Federal Reserve is Supplying said Collateral from its ever-expanding Balance Sheet. At a large profit no less. We...
Capital Flight and the demand for Tier 1 collateral is facing a severe shortage. The US Treasury has made it clear, it will be joining the Draino swirl party. All is well, come on in gamblers, the water is fine :)
As much as big banks want to sweep Archegos under the rug I don't think it's going to go away.
We are witnessing a Crisis on par with LTCM, similar to the Russian Bond collapse. The Reverse Repo pool can be used in Net Effect to raise Rates. "Net" as it has another insidious component to it - Money Markets will again come under duress as the DX moves below Par at 100 Basis. Money Market Funds are seeing large inflows as Primary Institutions are telling...