Liquidity worsens in $29T Treasury market as volatility soars | Hacker News Reader

Liquidity worsens in $29T Treasury market as volatility soars

ft.com

> “We are concerned because the movements you see point to something else other than a normal sell-off,” said a European bank executive in prime services, a division that facilitates leveraged trading for firms including proprietary traders and hedge funds. “They point to a complete loss of faith in the strongest bond market in the world.”

That sounds bad. Real bad.

Wouldn't it just take one pissed off country with lots of leverage? I agree, bad, but not really unexpected. I just don't understand why the US thought they could sell everything but their socks and then turnaround and try to bargain.

This is probably the thing that will break first, and the thing to watch in the market. Stocks can go up or down, but if borrowing gets too expensive, interest rates will soar. Even cutting the benchmark rate won't help much if that reduction doesn't extend to US treasuries that housing loans are tied to.

This is an underrated comment. The bond market is independent of any branch of the US government, and the federal reserve. It controls long term debt costs, inlcuding treasuries and mortgages (as you mention).

Its more liquid. Volume is very high, $3T traded in tlt over last 2 years. It could easily absorb all Chinese and Japanese held us treasuries if they don’t want them at these prices. Jpm and wfc are begging in on the action, trying to get Basel restrictions lifted.

Isn't this more of a "give them an inch they'll take a mile" sort of thing?

The Basel 3 capital reserve system is based in objective valuation which Menger proved false. This occurs indirectly through the weights, and reporting loopholes which prevent marked to market valuations.

It seems to me that the GSIBs, and primary dealers simply want to notch the ratchet a bit tighter by absorbing the next dealer to fail which iirc the conensus seems to be BofA being up next.

Hope you all have your passports and go bags ready.

Where you planning to go?

Hypothetically, if the US economy collapses, the whole world is coming down with them.

Why do you say that?

The global economy is so interconnected and dependent on the US economy that if it were to fail it would cause global chaos.

A contraction of growth by even a few percentage points will push most economies into a recession.

Failure of the US economy will pull down other economies by a few percentage points. If this happened world wide there would be chaos.

For a while. Then everyone dedollarizes and fights over which one should be the premier currency of trade.

New Zealand

As the other commentor notes, if other economies are sufficiently dedollarized, the damage will be limited, and global dedollarization has already begun.

Hypothetically, if the US economy collapses, the whole world is going down with them, and those that survive the socio-economic collapse (i.e. the first order producers with a defensible military), will be free to do as they please assuming the nuclear powers don't say, "fuck it" and blow everyone up as they lose control. The "If I can't have it no one else can", unthinkable insanity which all human beings are prone to given sufficient stress.

Every end can be a beginning depending on how flexible your thinking is. The unfortunate part is, most people today have had evolutionary selective pressures towards narrow and brittle thinking. So a great many people will be left out in the cold along with everything that normally occurs in a Malthusian reversion with the caveats that Catton is likely more correct than Malthus in that regard.

https://news.ycombinator.com/item?id=43636446

That was days ago! You now have to check which hour of the day an article was published.

https://archive.md/MbZlN

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