“US market liquidity STRESS is surging again: Banks’ demand for the Fed’s Standing Repo Facility (SRF) hit $14 BILLION this morning, and $11 BILLION on Tuesday, the highest since October, signaling rising pressures inside the short-term funding system. As a reminder, the SRF lets banks to borrow CASH directly from the Fed by pledging US Treasury securities as collateral, giving institutions an immediate source of liquidity when market conditions tighten. When usage of this facility jumps, it usually means banks are struggling to get cash in normal markets, dealers have less room on their balance sheets, or private lenders have pulled back. Soon the Fed will have no choice but to start buying Treasuries, adding further liquidity to the financial system to stabilize funding conditions. You can call it ‘QE’ or ‘Not QE’, but it will be similar to the 2019 repo crisis response.”
🚨US market liquidity STRESS is surging again:
Banks’ demand for the Fed’s Standing Repo Facility (SRF) hit $14 BILLION this morning, and $11 BILLION on Tuesday, the highest since October, signaling rising pressures inside the short-term funding system.
As a reminder, the SRF… pic.twitter.com/UCvQmgXiYn
— Global Markets Investor (@GlobalMktObserv) November 26, 2025
When the Bell Curve Peaks: Why M2 Velocity Has a 0% Chance of Spiking Back Up
“M2 velocity measures how often each dollar actually moves through the economy. When velocity rises, people feel secure enough to spend. When it falls, they sit on cash. And across the last sixty years, the pattern is almost perfect: velocity climbs during expansions, forms a rounded top, then rolls over when the cycle weakens. Every major peak has lined up with tighter policy, fading demand, or a recession.
The long chart breaks into eras. Before 2000, velocity generally trended higher, money circulated freely and wasn’t trapped in deposits or reserves. After 2000, especially post 2008, the slope turned down as QE caused M2 to balloon faster than nominal GDP. By the time COVID arrived, velocity sat near multi decade lows. Then the pandemic hit and velocity collapsed toward 1.1 as stimulus flooded accounts while spending froze.
The Rebound And The Stall
The rebound after 2020 wasn’t economic strength, it was the mechanical effect of reopening. Nominal GDP jumped thanks to inflation and pent up demand, while M2 stopped growing and even shrank as emergency programs ended and QT drained deposits. With GDP rising and the money stock flat, velocity moved up.
But now it has stalled in the high 1.3s well below the 1.5–1.8 range of the pre 2008 world. That plateau is the real tell. Households have burned through savings to keep up with higher prices and debt costs. Businesses used their buffers to defend margins. The easy gains from stimulus are over.
And historically, once velocity forms a bell curve top and flattens, it never spikes back to new highs. If you translate the entire 65 year history into a probability question of how often does velocity top, roll over, and then surge again? the answer is essentially 0%. Four major tops in early 70s, mid 80s, early 90s, and the dot com peak, all rolled into secular declines. You get small bumps, never new peaks.
Even the post COVID rebound, the biggest pop since the 80s, only took velocity to 1.39 still far below past levels. It wasn’t a breakout; it was a partial recovery from an unprecedented collapse. So the historical odds of a real spike after a rollover are effectively 0%, or at most 5% if you stretch the definition to include brief counter trend moves.
What Happens Next And Why The Lag Matters
Liquidity shifts don’t hit the real economy immediately. There’s a lag often 18 to 24 months between changes in velocity and changes in spending, hiring, and earnings. Rising velocity can cover up stress for a while because households are still drawing down savings. But once those buffers fade, the slowdown shows up quickly: rising delinquencies, weakening surveys, frozen housing activity, and softer job growth. That’s the pattern emerging now.
My view is that this plateau in velocity is a classic late cycle marker, the end of the stimulus driven rebound, not the beginning of a new expansion. If velocity rolls over while M2 stays flat or declines, nominal demand cools. When nominal demand cools, earnings weaken and unemployment follows.
Could policymakers push M2 up again and force another lift in velocity? Yes and aggressive easing and large fiscal spending can recreate something like 2020–22. But because of that 18–24 month lag, the inflationary consequences would show up long after the policy decisions are made. That’s exactly how the last inflation spike formed.
Velocity isn’t saying the economy is back. It’s saying the liquidity tailwind is gone, the money supply isn’t doing the heavy lifting anymore, and what comes next will depend on incomes, jobs, and credit not leftover stimulus. History is blunt: once velocity tops, the rollover is the beginning of the real story, not a setup for another spike.”
When the Bell Curve Peaks: Why M2 Velocity Has a 0% Chance of Spiking Back Up
M2 velocity measures how often each dollar actually moves through the economy. When velocity rises, people feel secure enough to spend. When it falls, they sit on cash. And across the last sixty years,… pic.twitter.com/YIVtStkYcI
— EndGame Macro (@onechancefreedm) November 27, 2025
A tiny pump and y’all started dancing as if anything has changed?
The trend is clear.
DOWN.
– Wynn
— James Wynn (@JamesWynnReal) November 27, 2025
Investors are paying one of the highest premiums for US stocks EVER:
S&P 500 Forward P/E is near 24x, the highest since the Dot-Com PEAK.
In the past, at a 23x P/E, the S&P 500 has delivered 10-yr annualized returns between +2% and –2%
If banks are pulling billions from the Fed while velocity stops moving then the slowdown is not coming, it is here.