Nice work. Am I reading this correctly that you are predicting 2026 bank reserve increases of 240-360BN? Which is 8-12% annual pace?
Or is that the amount of TBILLs purchased and that will serve to offset some unknown pace of reserve depletion due to CIC expansion while adding to the annual reserve growth provided by IORB?
Can you break down your prediction of 20-30BN monthly?
I see CIC related reserves drain of 5.5% annual pace
IORB related reserve expansion at 3.5% annual pace
Resulting in 2% net drain if doing nothing.
Do you agree?
2% drain is a need to buy bills at 4.6BN monthly for standstill
Assuming reserves need to grow with the economy and GDP growth assumption is 4% I see a need for 6% per annum growth given above 2% net drain. Yet you are projecting 8-12%. Why is that?
amount of-tbills purchased, based on 5% annual growth of CIC and bank assets, a minimum of 10billion for each item to remain in ample reserves regime (>11% "fed liquidity" as a perc of bank assets). fed could extend to more if it wants.
I certainly like the new format woth short term comment!
When I look at the WAM chart - seems like all the talk on ATI and treasury WAM is... kinda overhyped?
Which brings me to a question - do you think there is any plausibility to the theory of the "Global Liquidity" man? It always seemed like astrology to me. But in his recent big interview with Jack he finally said that what he calls "liquidity" is actually duration and I guess it makes a bit of sense, i.e. refinancing 1Y corporate bond into 5-7Y bond with higher rate might matter?
Nice work. Am I reading this correctly that you are predicting 2026 bank reserve increases of 240-360BN? Which is 8-12% annual pace?
Or is that the amount of TBILLs purchased and that will serve to offset some unknown pace of reserve depletion due to CIC expansion while adding to the annual reserve growth provided by IORB?
Can you break down your prediction of 20-30BN monthly?
I see CIC related reserves drain of 5.5% annual pace
IORB related reserve expansion at 3.5% annual pace
Resulting in 2% net drain if doing nothing.
Do you agree?
2% drain is a need to buy bills at 4.6BN monthly for standstill
Assuming reserves need to grow with the economy and GDP growth assumption is 4% I see a need for 6% per annum growth given above 2% net drain. Yet you are projecting 8-12%. Why is that?
amount of-tbills purchased, based on 5% annual growth of CIC and bank assets, a minimum of 10billion for each item to remain in ample reserves regime (>11% "fed liquidity" as a perc of bank assets). fed could extend to more if it wants.
What about IORB? Doesn't that offset by 10Bn monthly
I certainly like the new format woth short term comment!
When I look at the WAM chart - seems like all the talk on ATI and treasury WAM is... kinda overhyped?
Which brings me to a question - do you think there is any plausibility to the theory of the "Global Liquidity" man? It always seemed like astrology to me. But in his recent big interview with Jack he finally said that what he calls "liquidity" is actually duration and I guess it makes a bit of sense, i.e. refinancing 1Y corporate bond into 5-7Y bond with higher rate might matter?
Where ICE? Deport FRP!
More November juice = more squeeze?