Get Ready Because All Hell Is Going To Break Loose In Global Markets
Get Ready Because All Hell Is Going To Break Loose In Global Markets for King World News
As prepare to head into the second half of 202o, get ready because all hell is going to break loose in global markets.
Another Flood Of Money Printing
June 18 (King World News) – Jeff Snider at Alhambra Partners: On March 15, 2013, the US Treasury Department issued a request for a “large position report” (17 CFR Part 420). Any institution holding $2 billion or more of the 2% notes expiring in February 2023 (10-year maturity) had until March 21 to disclose that fact to the Federal Reserve Bank of New York (faxed disclosures accepted). The repo rate for this particular security as well as others nearby on the curve was acting suspiciously (heavily special).
This wasn’t exactly the time for worry, at least not in the conventional viewpoint. Ben Bernanke’s Fed had acted to growing signs of financial as well as economic trouble in 2012 by restarting QE for a third time that October. The initial launch didn’t seem to have enough impact such that QE3 was supplemented by QE4 (yes, there were four) in late December.
So far as most people were concerned, another flood of “money printing.” Hooray! With the economy seemingly on the mend from a close call, if 2012 had been a false dawn (as Bernanke would eventually write in his sanitized memoir) then surely 2013 would herald the arrival of recovery at long last.
Four times, apparently, was the charm.
But, repo. Something had been amiss in March and while the usual BOND ROUT!!! suspects chalked up the shenanigans to the piles of UST shorts who were surely betting on Bernanke getting it right for once, not even the Fed believed as much. As I documented contemporaneously here, FRBNY under QE4 had been buying up quite a lot of the OTR Treasury supply; stripping the system of the best of the best repo collateral.