Posted by DigiNomad on 17th of Jan 2024 at 12:17 pm
Liquidity - make no mistake, it's still increasing and that's
likely why all weakness is bought. Yellen and the Treasury
switching to short term bills over bonds was huge. The historical
split for Gov borrowing is around 20% notes and 80% longer term
bonds. It is now flipped completely on it's head to around
70% short term and 30% longer term. Institutions are the primary
buyer of longer term paper - no effect on liquidity. Lenders /
banks buy the shorter term paper and it expands liquidity...in this
case very significantly because of the flip from 20% issuance to
70% means there is a whole lot more for them to suck up. Then
there's the BTFP and other liquidity sources on top of the new era
of "fiscal dominance."
Posted by DigiNomad on 18th of Jan 2024 at 10:09 am
anjali25 - Sorry, there is no simple answer...the available
tools to track Gov flows now that they dominate the economy mostly
aren't available like they are on the private sector side..
This is the best explanation from a qualified source I've
come across. He explains the general effect of Janet Yellens recent
move at around the 6:50 mark. The rest of the video is a great
primer on overall liquidity mechanics.
The chart below is updated nightly - the green line is
central bank liquidity (unfortunately, I don't know how it's
derived...working on that).
https://www.youtube.com/watch?v=szq_Mtob2P4
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Liquidity - make no mistake,
Posted by DigiNomad on 17th of Jan 2024 at 12:17 pm
Liquidity - make no mistake, it's still increasing and that's likely why all weakness is bought. Yellen and the Treasury switching to short term bills over bonds was huge. The historical split for Gov borrowing is around 20% notes and 80% longer term bonds. It is now flipped completely on it's head to around 70% short term and 30% longer term. Institutions are the primary buyer of longer term paper - no effect on liquidity. Lenders / banks buy the shorter term paper and it expands liquidity...in this case very significantly because of the flip from 20% issuance to 70% means there is a whole lot more for them to suck up. Then there's the BTFP and other liquidity sources on top of the new era of "fiscal dominance."
How do you see liquidity
Posted by anjali25 on 18th of Jan 2024 at 01:46 am
How do you see liquidity increasing ?
anjali25 - Sorry, there is
Posted by DigiNomad on 18th of Jan 2024 at 10:09 am
anjali25 - Sorry, there is no simple answer...the available tools to track Gov flows now that they dominate the economy mostly aren't available like they are on the private sector side.. This is the best explanation from a qualified source I've come across. He explains the general effect of Janet Yellens recent move at around the 6:50 mark. The rest of the video is a great primer on overall liquidity mechanics.
The chart below is updated nightly - the green line is central bank liquidity (unfortunately, I don't know how it's derived...working on that).
https://www.youtube.com/watch?v=szq_Mtob2P4