Author: Lee Adler

Macro liqudity been bullish since early July. That was no secret. We were fully informed and prepared. And it’s no secret that this balance is about to flip to bearish. Really bearish. Can our beloved Fed get ahead of that curve?

The US Treasury issued its quarterly refunding report this week. So we now know what to expect from the US Treasury. We already knew what the Fed’s plans were. It made its policy pronouncement last week. More of the same. Snooze.

But that expectation is only good for the balance of this quarter, that is, through September. The government’s forecast for debt issuance beyond that, for the last calendar quarter, and maybe even for the next 7 weeks, should be taken with 5 pounds of salt.

The Treasury Borrowing Advisory Committee (TBAC) does ok for the current quarter when it issues its estimate halfway through the quarter. It helps to know what has already happened for the first half of the quarter. But their look-ahead forecasts to the following quarters are usually revised significantly, and sometimes completely reversed.

So we’ll focus on what we can reasonably expect from now through September. Even though we don’t know how much the government will spend on economic relief.

Here’s the key takeaway.

Open the report to find out what it is, why it is, and what to expect.

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Macro liquidity is growing at a historically rapid pace, but much slower than in the second quarter. And there are signs of trouble brewing. Here’s what they are and what to do about them.

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