Money Market Snapshot
The money‑market snapshot for June 8 shows Treasury bill yields steady around 3.7‑3.8% across short‑term maturities, with the Treasury slated to auction $115 billion of new bills on Tuesday. The Treasury General Account balance fell to $826 billion, $74 billion below its $900 billion target, while reserve balances dropped $52.7 billion to $3.01 trillion. Federal Reserve open‑market operations saw minimal overnight lending and a $1.832 billion uptake in reverse‑repo, and repo volumes edged lower. Commercial paper outstanding exceeds $1.4 trillion, with rates near 3.7%.
Plumbing Notes: The Warsh Prelude
The Federal Reserve is maintaining a steady flow of roughly $25 billion per month into the interbank market, aiming for a state of reserve stasis where net liquidity additions are neutral. This front‑loading has driven swap spreads and cross‑currency bases to...
Plumbing Feed: Swaps & Interventions
The ultra‑short end of the U.S. Treasury curve remains liquid as Treasury cash‑management buybacks and Federal Reserve reserve‑management operations have stripped roughly $200 billion of short‑term supply. Despite record‑high primary‑dealer balance‑sheet congestion—over $500 billion net long UST holdings—market frictions are low. Meanwhile,...
Plumbing Notes: The Peak-TACO Era
The piece declares that markets have entered a "Peak‑TACO" phase after a series of quasi‑ceasefires, with risk assets beginning to decouple from rate markets. Z6 futures for December 2026 reflect a modest de‑escalation timeline, suggesting investors price a realistic end‑of‑year resolution....
Plumbing Notes: Nothing Ever Happens
Money‑market volatility has markedly subsided, pushing overnight repo rates to near‑record lows and stabilising the SOFR‑FF basis. Higher inter‑bank volumes are keeping the basis narrow while swap spreads have widened, signalling easier funding conditions. The Federal Reserve’s aggressive volatility suppression...
The Fed's New Target: Part II
In Part II, the podcast examines how the ongoing "Great Compression" of money‑market rates is pushing the Federal Reserve to replace its traditional overnight Fed Funds target with a new benchmark. It explains that overnight Fed Funds volume has collapsed...
Infographics: Key Rates & Spreads In the Modern Repo Market
The episode breaks down the modern repo market by illustrating how overnight rates and dealer spreads vary across different repo segments—triparty, GCF, DVP, and NCCBR. It explains that dealers profit by maintaining a positive spread between the cost of borrowing...
Plumbing Notes: A Global Compression
In this brief update, the host explains how the Federal Reserve’s recent liquidity injections have compressed the SOFR‑FF basis, pushing overnight SOFR rates to just a few basis points below the interest on reserve balances (IORB). Major banks, led by...