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UST-USD capital flight charts

  • Our favourite US capital flight chart analytics
  • Updated as of date above
  • Valuation & positioning metrics for USTs, USD and gold

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Flows & liquidity analytics

  • Now with added high-frequency charts
  • Up-to-date snapshot of the most important flows & liquidity metrics
  • CB liquidity vs multiple markets
  • Private vs central bank credit
  • Mutual fund+ETF flows
  • CB balance sheet details

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When froth turns to fear

  • Markets are reeling from a monetary triple whammy: repo tightness, a faltering of other forms of credit creation, and a record $900bn in reserves drainage
  • But all these sources of monetary tightness ought to ease
  • The question is whether this episode drives a more enduring reduction in risk appetite and fund flows

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Why shutdown squeezes funding

  • US repo rates have already spiked beyond year-end levels
  • The squeeze seems likely to continue - and intensify - while the US government shutdown does
  • The immediate consequences are $-positive and risk-negative - but mostly point to a deeper unwind of crowded hedge fund positions

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The blinkered Fed

  • In a narrow technical sense, the FOMC was indeed hawkish
  • But in the cessation of QT and through questions, it more broadly reconfirmed a reaction function at once deeply asymmetric and completely oblivious to asset price inflation
  • This paves the way for a further melt-up in risk assets and havens - and for more assets to exhibit the sort of exponential sawtooth boom-bust recently seen in gold

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Free clip: The limits of easy money

  • Free clip from 22 Oct webinar
  • The fuel for the rally comes from a mix of fiscal stimulus being channelled into fund flows and financial sector leveraging
  • But cracks are beginning to appear, from First Brands, to doubts about circular financing in tech, to the flight into gold
  • To understand the limits of leveraging, look at the fund flows
  • First ten minutes free to view; full webinar only for clients with Group Webinar and One-on-one subscriptions

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The limits of easy money

  • The fuel for the rally comes neither from rates, nor from fundamentals, nor from central bank liquidity
  • It stems from a mix of fiscal stimulus being channelled into fund flows and financial sector leveraging
  • The resultant mix of too much money chasing too few assets both suppresses risk premia and postpones credit events - to a point
  • But it remains critically dependent on the continued credibility of the borrowers and the system

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The long-bond problem

  • The recent "bond rout" would be better described as a long-end bond technical
  • It reflects dwindling pension demand more than existential fears around inflation or debt sustainability
  • Governments should reduce their long-end issuance accordingly
  • Investors should continue to hold steepeners until they do - without necessarily being short duration

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Trading a decaying hegemon

  • The more Trump exerts personal control over US organs of state, the more the US' real power is eroded
  • The main mystery is why this is still not being priced into markets
  • Part of the answer revolves around the amorality of capitalism, and prospects for more easy money
  • But much is attributable to the extreme and abrupt nature of credit repricings

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When does liquidity turn to fumes?

  • Commentators argue increasingly that tariffs matter little, and for the return of US and tech exceptionalism
  • But this risks retro-fitting the explanation to the price action
  • An examination of the monetary data points to the exceptional way in which fiscal stimulus has been fuelling equities

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