Loading ...I too am so tired of hearing the negative and the big crash or meltdown but even Armstrong is talking about it.
I have little clue what repos are doing but don’t seem to have any secure plan for managing large sums of money.
I guess for us clueless with real world issues to keep us busy if it plays out like they say look for these signs for those who didn’t read it or having trouble understanding it without having time for research like me.
Translated: “Treasury yields will spike”, Pozsar warns, identifying the trigger of forced sales of Treasuries around year-end as the FX swap market. It gets worse, because the selloff that is triggered by a freeze in the FX swap market will promptly lead to a crash in the bonds market, and spread from there, or as Pozsar puts it, “these funding market stresses will likely pull away capital and hence balance sheet from equity long-short strategies which could spill over into a broader equity selloff… during a Treasury selloff – that’s not the right kind of risk parity Christmas.”
Which brings us to punchline #1: the dismal liquidity situation within the US commercial bank sector is so dire, that the shortage of reserves will start a cascade of liquidations beginning in the FX swap market, progressing to Treasurys, and culminating in stocks… and a full-blown market crash.