Not much has changed in liquidity measures since last week’s breakout to new highs. Most indicators have paused. But the market rallies remain well supported by adequate liquidity. Non-subscribers, click here for access.
Subscribers, click here to download the report.
There are a couple of things to watch. One is that the September T-bill paydowns have ended. These are regular quarterly occurrences that happen when quarterly estimated income tax collections come in. The US Treasury briefly has an excess of cash, and pays down outstanding T-bills. Those are direct cash infusions into dealer and big investor accounts, and they’re virtually always bullish. That prop now goes away until December. Non-subscribers, click here for access.
The other factor is that the Fed’s RRP slush fund has rebounded as a result of those paydowns, and the stupidity of quarter end window dressing. Much of that spike will disappear on October 1. Then we’ll see how much investable cash remains in the RRP facility, so that we can get a better idea of when that fund will run out of cash, and stop acting as a prop for asset prices. Non-subscribers, click here for access.
I continue to estimate that it will effectively run out of money in xxxxxxxxxxx, or xxxxxxxxx at the latest. That’s when we’ll find out whether animal spirits are sustainable on the basis of repo borrowing alone, along with the attendant increase in leverage. Non-subscribers, click here for access.
KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days! Act on real-time reality!
Attention New Subscribers! Please check your spam folder for your subscription welcome messages and post notifications and whitelist Liquiditytrader.com. Some email providers like Hotmail and others which use the Proofpoint gatekeeper are blocking Liquidity Trader emails completely. I have been unable to get them to stop. Please notify them to “Let my emails go!”
If you continue to have issues receiving Liquidity Trader emails, just check here daily at 9 AM ET for the latest posts.
THANK YOU FOR YOUR SUPPORT!
