Interesting comment on X by @Andreas Steno on X about a worrying development that took place yesterday.
As financials and regionals are getting hammered with signs of stress in USD money market, the SOFR - Fed funds spread keeps widening… Maybe the Fed will be involved earlier than they think on the QT ending stuff...
US funding market stress >>> Surging SOFR rates signaling a liquidity shortage
The most important indicator, as always, remains the SOFR rate: should the recent drift higher continue, the self-fulfilling cascade of a liquidity shortage will almost certainly be activated. And it did worsen... Source: zerohedge
Relative to inflation, Gold has never been higher than it is today. 13x vs. 9x at the peak in 1980.
Source: Charlie Bilello
Really important chart from @Econimica
QT NEVER happened in 10+yr USTs post-2022. The Fed still holds a large amount of long-term debt. The QT mainly took place through short-term Treasuries (the blue line). As explained by StockMarket.news, over the last few years, the Fed has been draining some money out of the system but doing it in a very controlled way. It’s avoiding a big sell-off in long-term bonds because that could cause interest rates to spike and hurt the economy. So while it looks like the Fed is being tough with QT, the reality is softer the real tightening is happening with short-term bonds, while the long-term side still has a safety net. It’s a reminder that even when the Fed says it’s tightening, it’s still making sure the markets don’t fall apart.
China's deflationary vortex is getting worse:
*CHINA SEPT. CONSUMER PRICES FALL 0.3% Y/Y; EST. -0.2% *CHINA SEPT. PRODUCER PRICES FALL 2.3% Y/Y; EST. -2.3%
US recession odds have cratered from over 65% earlier this year to only 6% today.
Source: Anthony Pompliano @APompliano
🔴 The US government posted a $1.8 TRILLION (6% of GDP) budget deficit in Fiscal Year 2025, which ended in September.
This matches the 3rd-largest budget gap in HISTORY. Revenues hit $5.2 trillion while spending $7.0 trillion. Source: Global Markets Investor
Without data centers, GDP growth was 0.1% in H1 2025, Harvard economist says.
The US economy growth is a tale of 2 worlds with a "K-shape". On one hand, genAI / tech spending and upper income consumers. They are in great shape. On the other hand, all the rest (low/mid income, manufacturing, etc.). They are struggling Will deregulation, fiscal & monetary stimulus + low oil prices help to make growth more balanced? Or will it end boosting even more the upper part of the K???? How long can it last?
