DVP (Delivery versus payment) Repo, which is the bulk of the repo market, made a new high last week, supporting a bullish trend in stocks. The players continue to be ready and willing to use repo to acquire and finance holding Treasury inventory. Non-subscribers, click here for access.
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Coupon issuance at mid-month was light which eased the burden on the markets. At the same time, the Treasury has issued a tsunami of T-bills in July and August. That turns into repo. That is insta-money. T-bill issuance is effectively money printing as long as the players are willing to repo the T-bills. If they were not, they would need to liquidate assets to buy the new T-bills. They’d rather hold their stocks and bonds, and use repo to buy the bills. It’s cheap financing for their holdings of long-term financial assets. Non-subscribers, click here for access.
In view of this process, here’s an illustrated look ahead at what to expect to signal a final top in stock prices. See for yourself, understand, and decide based on these specific triggers. Non-subscribers, click here for access.
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