Author: Lee Adler

Sell in May and go away is coming early this year.

Supply Tsunami, Arriving Early War spending blew a $142 billion hole in the usual April budget surplus. T-bill paydowns ended weeks before they normally do. The market must now absorb supply that dwarfs anything seen in comparable prior periods. Are you ready? This report replaces what the TBAC formerly published for us. It shows the bi monthly supply schedule of net coupon issuance and an estimate of the gargantuan T-bill supply that lies ahead. 

The unprecedented level of supply will lead to an unprecedented outcome. 

The seasonal T-bill paydown tsunami has arrived. Since March 24, $220.8 billion in T-bill paydowns has flooded the market with cash, temporarily overwhelming every bearish structural force. We have been on the alert for this. It happens every year. The magnitude of the rally is unusual. The mechanism is not.

Dealer Positioning Primary Dealers have stopped growing their long fixed income inventories. Coupon holdings have flatlined; recent accumulation has shifted entirely to T-bills. Dealers are no longer absorbing new supply — they are xxxxxxx xxxxx xx.