Dealer fixed income positions have shrunken recently. Is that because they are selling and deleveraging or is it because they must mark to market while their inventories lose value. Non-subscribers, click here for access.
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It looks like the latter. Because they have been adding T-bills and taking on a massive amount of new leverage via the private repo route. It’s clear that that leverage is being put to use, and the evidence shows that it’s not going into the bond market. It’s going to stocks. Non-subscribers, click here for access.
But what does it tell us about what the markets will do now? Here’s your answer. Non-subscribers, click here for access.
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