Loading ...It has indeed been the spectacular “everything rally.”
Such extraordinary asset inflation is possible only with some underlying Monetary Disorder. I have argued that international securities finance is at the epicenter of historic Global Monetary Disorder and resulting runaway asset inflation and Bubbles.
Our federal government continues to command the debt bullet train, expanding borrowings at a 10.4% pace during the quarter (strongest since Q1 ’18). Treasury Securities surged a notable $757 billion during the quarter to a record $18.572 TN. Treasury Securities jumped $1.154 TN over the past year and $2.341 TN over two years. Treasury Securities-to-GDP increased to 86%, up from Q4 07’s 41%. A broader measure of Treasury Liabilities ended Q3 at $21.048 TN, or 98% of GDP.
Bank (“Private Depository Institutions”) Assets expanded $245 billion during the quarter, or 5.0% annualized, to $19.753 TN. One-year growth was $829 billion, or 4.4%. Loans increased $118 billion (to $11.580 TN), or 4.1% annualized. Mortgage Loans increased $57 billion, or 4.1% annualized, to $5.597 TN (Total Mortgage Lending increased $185 billion, the strongest quarterly gain since Q4 ’07).
Fed has essentially signaled no rate hikes until after next year’s election (more likely the 2021 inauguration). Any inkling of instability would certainly elicit additional monetary stimulus. Perhaps bond markets are beginning to have an issue with all this. Is the Fed really going to expand its balance sheet $500 billion to quell any potential year-end “repo” market pressure? Today’s backdrop becomes even more reminiscent of fateful 1999 (and Y2K).