UST liquidity relief and fiscal funding tests
Key Questions
What stresses are evident in UST liquidity?
Foreign CB holdings dropped $82bn with China halving; HF basis trades at $2.4tn; Fed balance sheet creep mild per CIBC. Auctions weak amid deficits $18.8T and QT $1.7T.
How have Treasury yields been affected?
10yr yield at 4.41%, 2yr at 3.85% up 45bp on geo risks; repricing holds 'higher-for-longer' baseline. Ceasefire spurred rise on oil drop and cut hopes.
What vulnerabilities do experts highlight?
Sharma notes vulnerabilities, Dimon on credit/liq rollover; massive debt makes U.S. vulnerable in energy crisis. Debt vigilantes and liq squeeze risks amid CB gold shift.
How is global liquidity trending?
Weekly updates show rollover as dollar and volatility bite; chatter on Fed balance sheet ahead of reality per CIBC. DXY vol adds pressure.
What are the funding concerns for U.S. debt?
Foreigners reportedly 'done funding U.S.'; hedge fund swap trades exploded. Massive debt amplifies crisis risks per market veteran.
De-escal rally 10yr4.24%(-5bp)/2yr3.72%(-7bp); prior foreign CB-$82bn/China halve/HF$2.4tn/auctions weak/deficits$18.8T/QT$1.7T; Sharma/Dimon vuln. Why: vigilantes ease/CB gold vs de-escal/bond relief.