The "SLR" Will Soon Be Lowered, Greasing The Wheels Of The "Economy"

Here's Why This Does Not Affect The Repo Clog Timeline

Treasury Down to $305B, But BBB Should Pass Around July 4

The Treasury's balance is down to $304.841, but it looks like for the USA's 249^th birthday, it's going to go $5 trillion more into debt. That would be fine if there were $5 trillion available to borrow, but there isn't.

The repos to reserves ratio has already risen to the critical 83% level as of Friday, with volume breaking the $2.8 trillion level for only the second time. I expect repo [SOFR] volume to peak Tuesday into the quarter turn. The all time record is $2.830 trillion on April 30^th.

The rest of this post I wanted to go into some rumors about the "supplementary leverage ratio" being lowered so that banks can buy and sell more Treasurys as market makers so that the Treasury market can clear faster.

I sleuthed around several convoluted gibberish articles about this SLR thing that sound like they were written by someone trying to make fun of bankers if said bankers were on mushrooms without a spirit guide, and I couldn't understand a thing. Then I finally found an article by Robin Wigglesworth, the FT columnist at "Alphaville" and he made some sense out of it. The basic question I had is will the lowering of the SLR elongate the runway to a repo clog. My conclusion from the Wiggler is that no, it won't, either because the SLR won't really be lowered any time soon, and even if it is, it doesn't sound like it effects the repo market at all anyway. Here’s why.