Weekend Report: QT Pauses, We're Down To Our Last $600B

Jan. 14, 2024 7:02 AM ET

Summary

• Hedge funds are increasing short positions in palladium as the price falls again. Palladium should outperform other metals in immediate Fed pivot aftermath, but gold and silver will leapfrog pallladium as the dollar dies.

• Short positions in 10Y Treasury notes have reached a new record, indicating heavy basis trade continues to grow.

• The repo market has calmed down, but RRPs keep falling, ground zero ETA 6 weeks or so.

• Fractional Reserve aspect of the inflationary system is in hibernation with interest rates this high, therefore new money cannot be created through loans and RRP balance is necessary for funding Treasury