Yields eventually will rip higher due to issuance not inflation
— QE Infinity (@StealthQE4) June 14, 2024
BOSTON (Reuters) – U.S. bond market participants are worried market liquidity will keep deteriorating as the U.S. Treasury continues to issue large amounts of debt to back deficit spending while dealers struggle to keep up with the ballooning size of the market.
Liquidity – or the ability to trade an asset without significantly moving its price – has worsened over the past few years. U.S. government bond prices have fluctuated sharply since the Federal Reserve started hiking interest rates to tame inflation and the issue was discussed during several panels at the Fixed Income Leaders Summit event in Boston on June 13-14.
Regulators and the Treasury itself have launched a slate of reforms to improve trading conditions and avoid disruptions in the world’s biggest bond market, the bedrock of the global financial system. Still, many are concerned that vulnerabilities that emerged in previous incidents, such as in March 2020 when liquidity rapidly deteriorated amid pandemic fears, could still reappear in case of spikes in volatility and as demand struggles to keep up with supply.
finance.yahoo.com/news/bond-traders-worry-liquidity-worsen-142924937.html
Federal debt rose just $2 billion yesterday, but don't forget to add in the day's $2 billion cash drain from the Treasury – replenishing all the cash Yellen has burned through will add another $102 billion to the debt: pic.twitter.com/yKFy4XDz8p
— E.J. Antoni, Ph.D. (@RealEJAntoni) June 14, 2024
This is out of control:
In the first 8 months of Fiscal Year 2024, the US deficit hit a whopping $1.2 trillion, or $4.9 billion PER DAY.
In May alone, deficit spending was $348 billion or $11.2 billion a day, according to the CBO.
Over the last 12 months, the US deficit… pic.twitter.com/UWKnIiqVL7
— The Kobeissi Letter (@KobeissiLetter) June 13, 2024