This report examines and illustrates the most important line items on the Fed’s weekly balance sheet. It tells you what to look for to recognize when the markets will crash. Because that’s coming.
The markets are in a state of suspended animation while the Treasury is still paying down T-bills, and the Fed’s RRP institutional money market slush fund remains huge.
But the Fed seems determined to cut QE, with the byproduct showing up as slower growth in its balance sheet.
That will run head on into a surge of Treasury issuance. The debt ceiling will be lifted, and the Treasury will flood the market with T-bills. The RRP slush fund will act as a shock absorber for awhile, but it will plateau when some holders of RRPs decide to leave their cash parked there for good.
That’s when the real trouble will start for the Treasury market, with stocks to follow. I track the trends of those key Fed weekly balance sheet line items for you.
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