The market broadening in one chart
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Japan owns roughly $1.1 trillion in US government bonds. When it intervenes to support the yen, it needs dollars. Once its cash reserves are depleted, selling Treasuries becomes the most direct way to fund further intervention. That is a problem for the US. Large Treasury sales would increase bond supply, pushing prices lower and yields higher. With the 10-year Treasury yield recently climbing above 4.7%, Washington has strong incentives to avoid additional upward pressure. The solution is the Fed's FIMA Repo Facility. It allows foreign central banks to temporarily exchange Treasuries for dollars without selling the bonds into the market. Japan receives dollar liquidity, then later repays the funds and takes back its securities, leaving the bond market largely unaffected. The challenge is capacity. The facility is currently capped at $60 billion per day, while Japan is estimated to have spent $60–80 billion supporting the yen in just one week. According to reports, Bessent wants that limit increased. However, expanding the facility would require approval from the Federal Open Market Committee (FOMC), and the Federal Reserve has so far declined to comment. Source: Bull Theory
“Profit margins are probably the most mean-reverting series in finance, and if profit margins don't mean revert, then something has gone badly wrong with capitalism. If high profits don't attract competition, there's something wrong with the system.” - Jeremy Grantham Charlie Bilello
Omar Sharif of Inflation Insights points out that the ISM production index rose by the most for any July since 1951. Source: Lisa Abramowicz

