• Big fall, big bounce, but nothing has changed
• Week started with a textbook liquidation, with multiple asset classes selling off together – the Fall
• The liquidation did not snowball into something larger, which gave rise to the Bounce 
• Volatility aside, the trends of the past few months remain in place:
  • Stronger USD
  • Lower long end yields & flatter curves globally
• USD strength over the last few months is picking up steam:
  • The Dollar is testing/has tested key levels, and is looking to sustain breakouts against AUD, CAD, and GBP
• Markets are fragile:
  • Take up of the Fed’s Reverse Repo Facility is still near all time highs of almost $1 trillion
  • Sell off at the start of this week shows how vulnerable global markets are to collateral shortages, margin calls, and mass liquidations

Exuberant markets are fragile markets.

Fragile to what?

#Collateral (margin) calls, and the liquidations that come with it.

With long end UST #yields moving rapidly lower, it would be wise to remember that #repo collateral is still very scarce. pic.twitter.com/NgxdNLlnnQ

— The Pensive Nugget (@pensivenugget) July 20, 2021