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Kevin McBride's avatar

Awesome analysis! The correlation pointed out is between cash decrease and repo risk increase. How does the Fed not understand this correlation? Most likely is that they fully understand but are penned in.

Watch out for Sept 2019 redux.

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Monty Carlo's avatar

Great piece on RRP and how they trapped themselves, drowning in liquidity. It is appalling to see Waller's ineptitude in misinterpretation of RRP inflow - how can you not see that the MMFs and others are taking a risk-free ride from the Treasury?

What's your take on the TGA now running into deeply negative (deficit monetary policy) territory since all the QT liquidity drainage? I think that will break something in the mid-to-long term.

Afaik they almost never dipped into that vast crevice of negative income in the TGA before 2008/9 and then it recovered thanks to massive QE... which is now ending (rather: being ended).

This is going to be (no) fun since I still see a drop in S&P on 2008/9 levels highly possible with all this.

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