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Enjoy the Market Mirage Now Because We’re Really In a Desert

We did a comprehensive review of key liquidity drivers last week. It’s an important report for an overview of the forces that are at work here.

This week, I’ll just review the charts of the current data that I think is crucial to getting a grip on what to expect. For now, we’re in the midst of a mirage because markets are holding up ok. That’s due to one thing only, Treasury Bill paydowns that have pumped $120 billion into dealer and investor accounts over the past month. It’s not quite QE, because it’s not a direct injection into dealer trading accounts, but it’s enough to make the financial markets look like an oasis in the desert. Non-subscribers, click here for access.

Subscribers, click here to download the report.

It’s a mirage, and when it ends within the next xxxxx xx xxxxxx xx, the stench of death will punch us in the face. We’d better have our running shoes on. That means getting out at the first whiff that something ain’t right. Non-subscribers, click here for access.

We’re not there yet, and much depends on how the debt ceiling impasse plays out, and especially for how long it plays. Because once it is settled, that’s when reality will hit. This report explains how that will work, and when. Non-subscribers, click here for access.

Charts on US banking system data are based on data published on Friday evening for the week ended 9 days prior. In this case that’s April 12. They’re a week behind the Fed’s balance sheet data, which is posted on Thursday evening for the week just ended Wednesday. Ditto for the data on money market fund assets. Data on Treasury cash and tax receipts is virtually real time. It’s released daily, for the period ended the prior day. Fed RRPs are same day.Non-subscribers, click here for access.

Follow the charts of the real time data and stay a step ahead of everybody else.  Non-subscribers, click here for access.

Subscribers, click here to download the report.

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Posted in 1 - Liquidity Trader- Money Trends, Fed, Central Bank and Banking Macro Liquidity
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