저자: Kevin · 외국인
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미국 국채 시장의 유동성이 코로나 이후 최악 수준으로 악화되고 있으며, 10년물 금리 4.1%에도 매수 수요가 부족하다고 진단. 연준의 국채 축소(QT), 은행의 역레포 선호, 영국 연금 사태와 유사한 마진콜 위험이 원인으로 제시됨. 재무부가 2002년 이후 처음으로 국채 바이백을 검토하는 것을 공포 신호로 해석하며, 최악의 경우 미국 연금 위기로 번질 수 있다고 경고. 다만 인플레가 빠르게 진정되면 상황이 호전될 수도 있다고 언급.
다듬은 글
holy smokes treasury liquidity is an absolute shambles and some are wondering is our treasury market going bankrupt treasury Department's obviously a pretty big deal and with yields as juicy as what we've been seeing like today the 10-year treasury at 4.11 absolute freaking Insanity folks look at the peak of this summer the peak of this summer has turned into a joke compared to what we're seeing now this is crazy and yet even with rates this High folks are worried that the treasury market is becoming dysfunctional in this video we're going to talk about this dysfunctional treasury market what's happening why it's happening and what it means for us because the treasury Department is about to undertake something that they haven't done in over 20 years marketing back to the.com Bubble that's right well folks let's get into it this video by the way brought to you by Mumu but more on them later all right take a look at this treasury liquidity metrics last month reached the worst levels the market Mayhem has seen since the onset of the pandemic yeah and we had panic at the beginning of the pandemic okay so ladies mind-blowing that we are seeing treasury issues to the degree that we saw at the beginning of the pandemic when rates were like nothing okay then it was like why would you buy treasuries in this environment now it's like dude they're offering you four percent and there's still not enough liquidity for these suckers in fact it's so bad that not only are we seeing metrics that suggest spreads are as high as they were in 2020 but you've got folks now saying things like this you can drive a truck through the bid ask spread for some of the treasury Securities says the CIA of uh whatever some company here's a chart to basically show you the madness Okay so this was the beginning of 2020 right here and it shows you how briefly we had a spike in the spreads for Treasure yields basically the higher this chart is the more liquidity problems you you have when you have a lot of liquidity like a lot of cash a lot of buying and selling going on you generally have very very low spreads like all the way at the bottom of this chart over here that's because the more transactions you have the closer the market gets to where it should be right but when the market is like running out of buyers you got some people selling but you've actually got less transactions going on and specifically people don't have as much cash as they used to liquidity problems Spike except they don't Spike like they did in the covet pandemic where we had this sort of shock for a moment and we had a v-shaped recovery they've grown look at this the problems have been getting worse and worse and the liquidity issues have been getting worse as yields have gone up which is odd because more people should be wanting to buy treasuries right now but they're not they're not buying treasuries because they think that inflation is so out of control that even at four percent treasury yields this could be a risk and this could be a bad deal because maybe next month they'll be offering us five percent on our Treasury is how crazy could that be but the point is this chart go up it signals problems in the treasury market it is a stress of cash and not enough liquidity and so now the treasury Department is coming out and doing something that they haven't come around and offered before Reuters U.S treasury Department asked major Banks if it should buy back bonds yeah the treasury Department is now considering doing something they haven't done since the.com bubble and actually try to step in and provide liquidity for the bond market because it is so badly in shambles and we are just literally just now at the beginning of the quantitative tightening cycle that's scary because that combines this so let me paint this picture for you okay you have the treasury market and the treasury Department saying hey we'll sell you bonds we'll pay you 4.1 on a 10-year risk free no risk for 10 years every year for the next 10 years we'll pay you 4.1 percent and guess what people are saying yeah nah usually the Federal Reserve would come in and buy but see the problem is the fed's not buying anymore because the FED has well they're not buying as much anymore because the FED has now said it's time to roll off about 80 to 100 billion dollars worth of treasuries a month and so that means they're buying 80 potentially to 100 billion dollars fewer treasuries than they ordinarily would have been so the Federal Reserve is gone as a buyer other uh or banks are tapped in terms of how much they can borrow and I'll show you or how many bonds they can get uh by uh so they're tapped and I'll show you why in just a moment bankster Tab and otherwise companies and people are just out of cash and Pension funds are like wait a minute wait a second usually we'd be buying treasury bonds but wait what just happened in the United Kingdom the treasury Department had these juicy bonds that Pension funds were buying Pension funds would buy them but then the value of those bonds would drop and because Pension funds are leveraged they were getting margin called so buying these risk-free treasuries is only risk-free to the point that you're buying them with cash but if you're borrowing them and then they drop in value before they hit maturity well now you get margin called so you actually have multiple institutions who are ordinarily buying treasuries that are not the fed's not buying Banks can't buy anymore people are out of money companies are like uh we're probably wanting to use our cash to do cheap Acquisitions or we're running out of money too and we got to tighten our belt because cash flow is about to go down because we're going to do an earnings recession and you have Pension funds that are like yeah we we don't want uh to get margin calls like what happened in the United Kingdom even the Dutch Market which has way more leverage in the pension fund system than the United Kingdom in in the Netherlands in Holland they're like oh shaisa this could be bad yeah so why is the treasury Department now suggesting as Janet Yellen well uh maybe we could just buy our own bonds since nobody else is buying them I don't know why all of a sudden she sounds like a sick version of Mickey Mouse but but I don't know but we'll talk about those details and what they mean and what the Federal Reserve says is a danger about this right after I mentioned that this is brought to you by Mumu one of the best trading Platforms in town MooMoo offers countless trading of features to help you take it your trading game to the next level you should give Mumu a shot specifically to try out the amazing and advanced technical analysis features they have some of their charts some of the best and if you sign up using my link down below you will get up to 15 totally free stocks each potentially worth as much as two thousand dollars that's almost up to thirty thousand dollars that you could get and MooMoo is also available for the Australian audience so in the outback and you want to learn some ta check out my link down below if you're in the states alding account get 10 cash pack for every 100 you deposit up to fifty dollars a cashback plus get those up to 50 or sorry 15 free stocks terms and conditions apply but of course check out that link down below so back to the treasury Department what does this mean folks it means we're out of money but we already talked about that so what is going on like why aren't banks at least buying let's take a look at this so the underlying cause of the lack of liquidity is a the FED right B Pension funds C companies and people but also also also also Banks due to the SLR don't worry so much about what that means don't have the ability to buy more treasuries so in other words Banks who are sitting on a lot of cash can't actually go shopping for these treasuries but why would they because a they can't via the SLR but two they don't need to they can just park their money with the Federal Reserve in the reverse repo market and they can let their money sit here see this right here is when the SLR requirements expired and so then all of a sudden Banks started putting their excess cash in here and so we've seen that excess cash balloon well the problem with this is now the Federal Reserve and this is where it gets dirty now the Federal Reserve is having to pay these insane interest rates on all of these Bank deposits so banks are like hey we don't need to take the risk and buy your stupid treasuries even though technically they're risk-free assets if we're levered up then we have lots of risk because the value could drop in the short term if you don't hold the mature maturity right instead let's just collect a lot of money from the Federal Reserve you know who's winning big here it's the banks folks it ain't the people it ain't the government it's the banks because the banks are collecting all this money the more money the banks collect here means the less money the treasury Department gets and the less money the treasury Department gets means the treasury Department ends up going into more debt which is interesting because now the treasury Department is like hey let's buy back our own bonds which maybe we can buy them back at a discount but that means the treasury Department is using more cash temporarily to try to pay less interest in the long term by buying back their own bonds potentially at a discount but again potentially and ironically increasing their debt sure they might have some benefit of not paying some of the higher interest and being able to buy back some of these bonds at a discount but when does this end and so this creates a very dislocating nightmare where some folks are just worried about the future of this see look at this the treasury Department carried back uh carried out Buybacks in 2002 was the most recent time and some have been saying hey let's try that again and the Federal Reserve Bank of New York has a staff report from 2007.
these dates are great.com Bubble Great Recession whatever BuyBacks and treasury market and debt management and see they actually think it's constructive they actually like that hey during a time of budget surplus which is the last time we did this into in in the early 2000s let's use BuyBacks because you have extra cash but we're in a huge budget deficit right now so another big difference we're in a huge budget deficit right now now the FED says hey we think that uh if you buy back debt and then cancel that debt you're paying less interest we've done this before we think that ultimately there could be a benefit to you buying back treasuries so the conclusion just wrapping up of their paper is that hey we think even during a period of debt or deficit spending there could be a benefit to buying back your own treasuries but we've got a few problems the first problem is actually outlined in that fed report I just showed you they say the difficulty with strategic BuyBacks is knowing when to stop that is identifying the point passed which further increases of the size of new issues conflict with the debt management objective of least cost financing that's just a fancy way saying hey if you buy back your own debt maybe you're able to reduce your interest payments but now you're kind of like you're messing up the existing market and we haven't done that before so let's put these pieces of the puzzle together here's my bottom line to this now this is my opinion this is just my understanding the treasury Department is now using a tool they haven't used since the.com era they last used it when we had a budget surplus now they're going to use it in a budget deficit using a 2007 paper from the FED who says it should be okay okay sounds good thanks now it should be okay which means temporarily treasury BuyBacks should help provide liquidity and lower yields in the short term and increase bond prices that's the theory that's good but what if it fails what if the treasury goes out and provides liquidity for six months or three months whatever and then all of a sudden it doesn't work and yields continue to go up bonds continue to fall in price and spreads continue to widen that chart I showed you earlier well now it tells the market uh oh the treasury market took out a tool that they haven't used since the.com bubble and it failed that creates even more fear that the bond market is screwed which could lead to even less Bond buying more bonds selling lower bond prices higher yields now the pension disaster that you saw in the United Kingdom could come to America because now Pension funds in America start getting margin called and they start dumping bonds now the FED has to decide In America which is a global precedent Center oh God okay now we have Financial stability concerns in America do we keep hiking or do we bail out Pension funds or let them go bankrupt remember Pension funds go bankrupt then the companies become responsible for paying the pensions of the employees who worked for those companies which could lead to a disaster of earnings for those companies as they take massive write Downs or those companies go bankrupt and then the government has to bail them out anyway which creates more of a federal federal budget deficit every which way you slice this is the fact that the treasury Department is coming out and starting to do this it should be scary it's a sign that things are getting so bad that Janet Yellen is trying to pull stuff out of a hat from the.com era and we have no idea what's gonna happen now I gave one scenario of what could happen the other scenario is that in two months inflation could plummet to four percent and stocks could Moon and bonds could rally and yields could plummet and everything's fine you know all the tides just don't go out all the way the other potential is you sign up for MooMoo via the link down below and you leave a comment to let me know what your thoughts are because I don't know but I will say when I studied this over the last few days here and have now put this video together I'm like oh boy I don't like the idea of reaching into a bag of experiments to see what will happen let me know what you think but Halloween is starting to look darker and darker
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