A large imbalance has once again hit the ultra-short-end, this time with too much liquidity driving an epic decline in overnight (o/n) rates. Calling the pre-Warsh period “the calm before the storm” has proven more than an understatement. J
The level of monetary statecraft continues to climb. Causing a “stir” on the street, TBAC — a group of private-sector thought leaders that advise the U.S. Treasury — announced a potential mechanism to deploy excess liquidity from the U.S. e
The Powell era of $ funding markets is set to conclude with volatility approaching all-time lows. The Fed has front-loaded its reserve injections to avoid another repocalypse. Deregulation has boosted swap spreads — Conks’ primary gauge of
Welcome to a new type of Conks article: Plumbing Feed. First, it’s not obvious to new readers or those without the Substack app that we’re publishing additional thoughts via the chat (a.k.a Conks Feed). Second, some readers have also reques
The next phase of the Not War1 has now commenced. Following a stream of conflicting news, information warfare has grown futile. Markets no longer respect artificial de-escalations. Upon reaching headline fatigue, words have given way to act
In the face of a prolonged Not-War, short-end rates and beyond continue to rise. The longer the Strait “that must not be named”1 remains closed to traffic, commodity prices will not only climb but persist at higher levels, feeding into both
— created as part of The Warsh Ultimatum (upcoming)
The Middle Eastern “Not War”1 is creating fragmentation in dollar funding markets. Onshore, conditions remain lax. Money funds have received hefty flight-to-safety inflows, pressuring bill yields and o/n (overnight) rates lower. Offshore, m
The dampening of money market volatility has prevailed. Marked safe from geopolitical risk, o/n rates in repo, FX swaps, and unsecured dollar markets have settled at a new equilibrium or continued their descent. Multiple catalysts endanger
— created as part of The Warsh Ultimatum (upcoming)click to enlarge (best viewed on desktop)click to enlarge (best viewed on desktop)
— click here for Part I and here for ProWith a Great Compression in money market rates underway, it’s the ideal moment for Fed officials to switch to a new target rate. As Part I unveiled in detail, volume in overnight Fed Funds (o/n FF) —
— created as part of The Fed’s New Target
The U.S. central bank’s liquidity injections are working too well. After a month or so of Fed bill buying, the entire SOFR-FF basis curve has been crushed, with SOFR, the U.S. central bank’s primary repo benchmark, already hovering around i
Recently, we published a “mega-infographic” that unveiled the plumbing of the repo market in detail.available in light modeGiven the amount of information required to demonstrate the complete flows of a repo trade, the graphic is tough to n
— created as part of The Fed’s New TargetA decent zoom feature will be required to navigate this extensive infographic, but the image viewer on Substack does not seem to be sufficient. Consequently, it’s recommended to download and view the
— click here for ProMoney markets have experienced yet another quiet year-end. Just a week after ending its balance-sheet taper — where officials shrink the central bank balance sheet via QT1 — the U.S. central bank has commenced an onslaug
— created as part of The Fed’s New Target
In a rare feat for an FOMC meeting, the plumbing has stolen the limelight from macro. The Fed has not only front-loaded cuts but now reserve injections, announcing a much-earlier-than-expected start to buying USTs (U.S. Treasuries) at the u
The suppression of short-end volatility continues, with the U.S. central bank set to announce at least one type of routine UST (U.S. Treasury) bill operations. Fed officials are set to unveil their first bill purchase schedule on December 1