Repo market chaos continues
The repo market blew up in September 2019 and the Fed had to step in with emergency measures.
But what no one is able to piece together is how the Feds intervention in the repo market plays out.
Is the repo market end game inflation? Is it deflation?
It could be but I'm becoming more convinced the end game for the repo market is the bond market.
If you have an interest in the future of the US economy this repo market video is for you! The real economy can't stand higher interest rates.
Therefore it's a common belief the Fed can and will continue to expand its balance sheet to combat any negative event, including in the repo market.
But what if they can't continue to expand their money printing efforts, what if they can't support the repo market?
Before I saw inflation as being the Fed's ultimate Kryptonite and we'd need to see inflation before we got to an “end game” type situation.
I now believe we've crossed a threshold where the Fed is backed into a corner where ANYTHING they do will bring on economic collapse and the end game.
Why? Because the balance sheet continues to expand it could drive rates higher instead of lower.
If rates go higher and they could, then the US economy grinds to a halt.
In this repo market end game video, I discuss the following:
- Why Jeff Sniders collateral hypothesis is playing out with MBS's.
- New repo market insights you've never heard.
- Repo market end game…what does it look like and what are the catalysts you should be looking for?