07-08-2024 Liquidity is running dry, "It’s So Lonesome it Could Cry."

---------------------

Hear that lonesome Repo well. It sounds too low to fly.

Last week, the implied likelihood of a September Fed rate cut rose to 73%. Over a week ago, it was 62%.

Bonds cry for a “higher for longer” Fed. But the fall of the dollar and the steadfastness for gold suggest that turmoil is ahead.

Recently, clogged bank balance sheets caused a spike in repo rates while reserve balances declined. Will the Fed accelerate the QT taper that it began in late 2023?

Liquidity is running dry, It’s So Lonesome it Could Cry.

--------------------------

Song: I'm So Lonesome I Could Cry (1949)

https://www.youtube.com/watch?v=4WXYjm74WFI