All Macro-Thematic Trend Reports:

Mr. X: “Oil is the trigger, like in 2022, but with shale production rolling over and the US SPR drawn down.” (FFTT, 8/16/23)

A $50bln or $100bln sale of duration per month in times of stress wouldn’t be all that substantial for the PBOC which holds 3tln in liquid assets. But it would have huge implications on the duration markets in the US. Essentially double QT.  While many bears focus on the implications for China, the big risk is to the US duration markets. This magnitude of supply combined with elevated issuance and QT could easily be enough

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Four very destabilizing things just happened (FFTT, 8/2/23)

About 44% of Federal debt (read >$15 trillion) is sub-2 years duration.  Along with about $2 trillion+ of CRE debt (much of that is currently in negative NPV projects).  In my opinion, we are very likely to witness a return to QE and YCC before year-end 2025.  I do not see a probable mathematical alternative.     -Michael Taylor, via Twitter, 7/23/23 What is something that you have a lot of conviction about, but that financial markets

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“Looks like fiscal dominance.”  The most important former Fed economist commentary of 2023 (FFTT, 7/26/23)

The upshot is that the more government debt the banking system must fund, the more power the system has to force changes in monetary policy to the sacrifice of lower inflation. When a government issues huge amounts of debt to the financial system, mainly to banks, any attempt to tighten monetary policy causes a loss to the banking system on its existing debt portfolio, either because of price declines, or because their liabilities will see

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