Liquidity 02 incl QE, Twist, LTRO, APP etc (Jun 14 - Dec 25)

[winston]

Stocks face hit as US$800b stimulus to fade, Citi says

by Richard Henderson

Equities and other risk assets will take a hit when central banks withdraw as much as US$800 billion (RM3.55 trillion) of stimulus deployed to prop up the global economy.

Apart from monetary support deployed by other central banks, the US Federal Reserve has also bolstered its balance sheet by US$440 billion in the wake of the US banking crisis.

Now, that support is set to unwind, as China’s central bank reins in easy policy settings amid robust growth, while its peers in the US and Europe rekindle quantitative tightening.

We think this could subtract US$600 billion to US$800 billion in global liquidity in coming weeks, undermining risk in the process.

“With peak liquidity past, we would not be at all surprised if markets were now to experience a sudden pressure loss”.

“Market breadth supporting the rally has been extremely poor”.

Source: Bloomberg

https://www.theedgemarkets.com/node/663989

[behappyalways]

A view of the blended US money supply going back nearly 200 years: this is the fastest money supply contraction since the 1930s
https://twitter.com/Mayhem4Markets/stat ... 2044438528

[behappyalways]

The Treasury Department could issue $700 billion in T-bills within weeks of a debt-ceiling deal, draining liquidity from markets
https://markets.businessinsider.com/new ... ult-2023-5


The Treasury may issue up to $700B in T-bills just weeks after any debt ceiling resolution, pulling liquidity out of the market.

While the lack of issuance was helpful to offset the impacts of QT, such a sizable issuance is like an amplifier for tightening financial conditions.

https://twitter.com/Mayhem4Markets/stat ... 2183690241

[behappyalways]

And US Treasury ready to vacuum up another postponed $ Trillion following a debt ceiling deal
Liquidity set up for more, faster contraction
https://twitter.com/Halsrethink/status/ ... 9076565002

The Treasury Department could issue $700 billion in T-bills within weeks of a debt-ceiling deal, draining liquidity from markets

https://markets.businessinsider.com/new ... ult-2023-5


The Treasury may issue up to $700B in T-bills just weeks after any debt ceiling resolution, pulling liquidity out of the market.

While the lack of issuance was helpful to offset the impacts of QT, such a sizable issuance is like an amplifier for tightening financial conditions.

https://twitter.com/Mayhem4Markets/stat ... 2183690241

[behappyalways]

Too much liquidity out there....


Kim Kardashian Pitches New PE Venture To "Overflow Room Filled To Capacity" At Berlin Conference
https://www.zerohedge.com/markets/kim-k ... conference

[behappyalways]

Treasury issuance is heating up next week, with a whopping $296B of US debt on auction!
https://twitter.com/Mayhem4Markets/stat ... 4990076934

[winston]

Behind the bullish faith in stocks is a system still awash with cash

by Naomi Rovnick and Harry Robertson

BNP Paribas estimates excess global liquidity has risen by $640 billion since the end of third quarter of 2022 and is "unsustainable" when some central banks are trying to offload bonds.

"Japan is creating liquidity", while "we expect more Chinese (monetary) easing".

Total global liquidity, a measure of cash and credit in the world economy, has risen to almost $170 trillion in June from $158 trillion in October.

Source: Reuters

https://finance.yahoo.com/news/tranquil ... 47675.html

[behappyalways]

S&P 500 vs major central bank balance sheets

https://twitter.com/Mayhem4Markets/stat ... 4899597318

[behappyalways]

The $1.5 trillion drawdown of the TGA in 2021 moved $1.5 trillion in cash from the TGA (a liability on the Fed’s balance sheet) to the markets because the government was spending money it didn’t have to extract from the markets via bond issuance. This huge amount of liquidity to seep into the markets over a 12-month period explains in part the hot performance of the stock market in 2021.

From late 2021 through April May 2022, the TGA was being replenished and absorbed nearly $1 trillion, and markets tanked. There are always some lags. In June 2022, the S&P 500 began to bounce off in its up-and-down manner.

US National Debt Hits $32 Trillion, up $572 billion since Debt Ceiling Suspended. TGA Starts Refilling, Drains Liquidity from Markets
https://wolfstreet.com/2023/06/17/us-na ... m-markets/

[behappyalways]

Combined central bank assets have fallen by $1.2t since March (PBOC assets down CNY 1.5t). With continued QT and the ECB's TLTRO expiry next week of EUR 478bn they will soon hit a new low. The divergence with global equities is clear.
https://twitter.com/PPGMacro/status/1671048077145255936



Fed Reverse Repo $1.989TN, down $23BN from $2.012TN.
As a reminder, TGA rose by $115BN to $250BN
https://twitter.com/zerohedge/status/16 ... 2702361635