The Institutional Risk Analyst

When the price of gold rises what is really happening is that the value of fiat currencies is falling. The rout ongoing in the bonds of the various industrial nations suggests that the dollar and all of its subsidiary currencies are in big trouble. Yet none of these democratically elected governments are willing to take steps to arrest the decline in their credit standing, namely raising taxes and reducing public spending.

The fact that Secretary Bessent felt the need to make an announcement of increased bond buybacks in front to the 20-year auction suggests that the Treasury is expecting more weak auctions going forward. How else do we explain Bessent’s behavior? But more important, when will President Trump and Secretary Bessent stop pretending that the situation in the Treasury debt market is not a problem?

Brent was down to about $94/barrel ($103 last week). Gasoline prices also fell to $4.39 vs $4.52 last week, with diesel down to $5.52 vs $5.63 last week. But technology stocks are at all-time highs led by the likes of Micron Technology, Inc. (MU), which is up over 800% in the past year. Are the US equity markets approaching an inevitable reset?

We all need to remember that shrinking the Treasury portion of the Fed balance sheet is the easy part. The $2 trillion in notional amount of MBS held in SOMA, which now has an effective duration that is much, much bigger than the rest of the portfolio combined, requires some subtlety. The good news is that the agencies and Ginnie Mae are thinking about a potential Fed MBS swap with Treasury. Wall Street can make it all happen and profit handsomely by selling a lot of “AAA” ra

As we told Bloomberg TV last week, not only has the President's attacks not forced Powell out, but he has made this decidedly mediocre Fed chief a progressive martyr. As a result of Trump’s ill-considered attacks, Powell will likely remain as a Governor through 2028, depriving the President of an opportunity to appoint another governor for a 14-year term. How does this mess serve the agenda of President Trump?

The Trump FSOC document reads like a Marvel comic book and is entirely laudatory towards crypto fraud, but uses the same idiotic language as former Treasury Secretary Janet Yellen in describing the grave systemic risks posed by residential mortgage servicers. The report states incredibly: "The continued use of U.S. dollar-denominated stablecoins is expected to support the role of the U.S. dollar in the international financial system..."

The Fed's actions in 2008 and again in March 2020 were largely driven by the sole mandate of the central bank -- to keep the Treasury market opening and functioning.

Some of the smaller holders of MSRs may ask themselves if selling right now is not the best strategy over a 36-48 month horizon.

When you see a bank with more than 10% of total assets in MBS, that's a big red flag in our book.

You can tell lies and damn lies about the idea of releasing Fannie and Freddie, but the SEC and FINRA cannot and will not say a word.

In 2019, the FOMC essentially nationalized the US money markets, eliminating private price discovery for a representation of a market.

The market tantrum which began on Friday was largely over by the market close on the following Tuesday.

Yellen's proposal for a backstop is merely a canard to help Treasury avoid another fiasco next time a Ginnie Mae issuer fails

Powell won’t hit the two percent target, but he won’t change the target either.

If President Trump starts talking about fixing the federal budget deficit and redeveloping moribund urban real estate, he’d win in November

As the public debt of the US grows, after all, the implicit claim of the Treasury on all private US assets also grows.

As with the Volcker Rule for banks, the move to centralized clearing of Treasuries and T-1 settlement seems destined to reduce liquidity

Whether we have Donald Trump or Joe Biden in the White House next Christmas, the US seems to be on a trajectory to a financial crisis...

The last Treasury Secretary that tried to extend the maturities of US government debt was Jack Lew (2013-2017). Yellen missed an opportunity

Until Chairman Powell comes clean with the Congress and the American people, more banks will inevitably fail.