The Macro Charts You Must Know #3
If the frame above isn’t loading, you can read Week In Charts over here.
The week in a nutshell:
- 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.— The Pensive Nugget (@pensivenugget) July 20, 2021
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
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