UPDATE: Past week (Feb 22 to Mar 1) changes in US Net Liquidity 👀
Fed reserves: -$42B
TGA: -$96B
Reverse repo: +$20B
NET: +$34B (Prior week: -$92B -- CONTRACTION)
US Net Liquidity EXPANDED approximately $34B from 2/22 to 3/1.
Net POSITIVE for risk assets, ceteris paribus.
"We know that the Fed’s balance sheet will shrink $100 billion per month, which is negative for risk.
But we also know that the Treasury will draw down the TGA to zero due to the debt ceiling being hit. The TGA is at ~$500 billion currently.
That means the downside of the Fed’s QT over the next 5 months is likely to be cancelled out by the spending of the TGA in the US economy."
https://medium.com/entrepreneur-s-handbook/be-present-aff45d6421b4
Thoughts?
Liquidity is fungible 🤝
Hat tip Luke Gromen, I think, for pointing that out to me. An aha moment.
