BBB Passes! Debt Ceiling Raised! Let's Start The Final Liquidity Drain!

And 739 contracts worth of platinum just went off the market. 3,260 contracts worth of platinum remain on the Comex. It's really tight over there.

I’m late this week, but I have two excuses. One, I’ve been traveling and I’m jetlagged, and two, they lost my bag with my computer in it, so I had to buy a new one, and couldn’t work in the meantime. I’ll probably get it back, but I can’t reach anyone so for now it’s gone.

I’m in South Florida for the next few weeks, so if anyone in the area wants to get together, write back to me via email, endgameinvestor@gmail.com

Big Beautiful Bill Will Pass, Is My Theory Correct?

It’s been a back and forth with Thomas Massie’s last-minute fight against the BBB, but he ultimately lost, and the bill is going to pass before July 4^th. This is going to be a moment of truth for EGI. I hope I don’t end up looking like an idiot. If I’m correct, then this is what should happen.

1. The Treasury should start raising cash next week.

2. We should start seeing bank reserves fall as this happens. We’ll have our first confirmation in a week or two, depending on when the Treasury starts flooding the market with new debt.

3. As bank reserves fall and repos continue to drift higher, we should get to a point where repo rates suddenly spike.

4. The Fed should intervene shortly after this and restart QE.

A caveat on steps 3 and 4, the Fed may intervene before there is a repocalypse, in anticipation of it. I guess we’ll find out.

Alex Harris, the plumbing queen at Bloomberg, reports that, yes, something is going to happen soon, but nobody is sure exactly what. She writes, in an article entitled “Volatile Quarter-End Signals Funding-Market Dysfunction to Come”:

Rates in the US funding market surged at the end of the quarter in a sign of potentially further dislocations in money markets as Congress lifts the debt ceiling.

Volatility intensified on Monday beyond the typical spikes seen at the end of months and quarters. That’s fueled concern among some market participants about dysfunctions in the plumbing of the US financial system and the ability of the market to absorb the deluge of bills once the debt ceiling is resolved.

Now, with the president’s tax bill making its way through Congress, that test seems all the more imminent, with some predicting the onslaught of issuance will begin as early as this month.

Yeah, I guess I’m one of those predicting those things.

SOFR volume is still right near $2.9 trillion, still on its upward trajectory, and no reason it shouldn’t continue that way.

There was news yesterday that the standing repo facility [SRF] was utilized to the tune of $11B on June 30^th, but once again, the Fed’s rate of 4.5% was ineffective, since most banks cannot access the facility and had to borrow on the open market at rates above 4.5%, as you can see below:

Keep in mind that the upper bound of the Fed’s target range is 4.5%, so anything above that means the Fed is already losing control of interest rates, even with the SRF, which is useless anyway.

Reverse repos spiked to a high of $460B, which has been the upper bound of the RRP facility since September 30 last year.

What that suggests is that after the Treasury raises about half a trillion in debt, the RRP will be empty, and the rest of the dollars will have to come from bank reserves directly. Reverse repos are not part of bank reserves. Once about $300B are sucked out, SOFR volume should equal bank reserves available. Then the fun should start.

739 Contracts Worth of Platinum Removed from Registry

This is a big move, and it won’t show up on GoldChartsRUs because