115.3 Seven Warning Signs to Watch in Debt Ceiling Drama 

———Ep 115.3 Summary———
Financial collateral is indispensable to the modern monetary system. Unfortunately the most pristine collateral, the US Treasury Bill, is in short supply because of the political debt ceiling drama. So, we identify seven warning indicators for acute collateral shortage.

Macropiece Theater with Alistair Cooke (i.e. Emil Kalinowski) reading the latest essays, blog posts, speeches and excerpts from economics, geopolitics and more. Interesting people write interesting things, why not listen and hear what they have to say? You could do worse things with your time (i.e. Bloomberg, CNBC, et cetera). Recent readings include thoughts from George Friedman, Lyn Alden, Daniel Oliver, Michael Pettis, the Bank for International Settlements and yes, even Karl Marx.

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———Ep 115.3 Topics———

00:00 INTRO: How will we know when a shortage of collateral starts the next monetary disorder?
01:11 The US Treasury is issuing fewer US Treasury Bills because of the impending debt ceiling.
02:55 The 4- and 8-week UST Bill yields have fallen in the primary market, at auction.
05:10 The September 24 8-week UST Bill auction yield fell below the Fed’s Reverse Repo rate.
07:14 Warning Indicator #1: extreme price behavior in the secondary market (esp. in morning).
08:08 Warning Indicator #2: market participants begin to borrow securities from the Fed.
10:34 Warning Indicator #3: Fed scales back quantitative easing reinvestment into UST Bills
12:39 Warning Indicator #4: Fed re-proportions quantitative easing away from buying UST Bills
13:53 Warning Indicator #5: the Fed’s Reverse Repo Program continues to grow
15:59 Warning Indicator #6: securities in custody for foreign and international accounts falls
18:30 Warning Indicator #7: Fed’s Reverse Repo Agreements for foreign official accounts rises

———Ep 115.3 References———

Some Next Steps To Watch For Scarce Collateral: https://bit.ly/3l3xGxH
Alhambra Investments Blog: https://bit.ly/2VIC2wWlin
RealClear Markets Essays: https://bit.ly/38tL5a7


Jeff Snider, Head of Global Investment Research for Alhambra Investments and Emil Kalinowski. Art by David Parkins, licensed to killustrate. Bassy James-Bond-style podcast intro/outro is “The New Black” by Mary Riddle found at Epidemic Sound.