The Year 2021
Two 6 standard deviation moves so far.
- hedge fund deleveraging in the GameStop drama.
- relative value rates, sell-off in 5s vs rest of the curve, US treasuries.
*in both cases too much capital was hiding out in crowded venues.
Two 6 standard deviation moves so far.
- hedge fund deleveraging in the GameStop drama.
- relative value rates, sell-off in 5s vs rest of the curve, US treasuries.
*in both cases too much capital was hiding out in crowded venues.
When central banks do NOT allow the business cycle to function over longer and longer periods of time - the good news is wealth creation becomes colossal. Bad news is Capital moves into crowded venues, poised for disruption.
(2)
(2)
In rates, as the bond market sold-off. Originally, the long end 30s was deemed at risk, capital moved into 10s, 7s, a “safe” place. As selling pressure moved into the middle part of the curve, trillions moved into the front-end looking for duration risk shelter.
(3)
(3)
In recent weeks, 5s became the colossal hangout, a perceived “safe” place. Then the US treasury brought another* $100B for sale (5-7 year paper) this week. Anemic demand triggered the now historic, 6sd blow-up in 5s.
*total $1.8T for sale in 2021, above Fed asset purchases.
End
*total $1.8T for sale in 2021, above Fed asset purchases.
End
Worst single day for 5s since 2002... What lending instruments are tied to US 5 year bond yields? FCIs are key.
#FinancialConditions
#FinancialConditions
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