The most powerful buyers in Treasuries are all bailing at once

Bloomberg/Liz McCormick, Garfield Clinton Reynolds and Michael Mackenzie/10-10-2022

graphic image of chickens coming home to roost“If one or two of these usually steadfast sources of demand were bailing, the impact, while noticeable, would likely be little cause for alarm. But for every one of them, all at once, to pull back is an undeniable source of concern, especially coming on the heels of the unprecedented volatility, deteriorating liquidity and weak auctions of recent months.”

USAGOLD note: We have consistently argued that a pivot, if it comes, will be centered around the inability to sell Treasuries in the private market, and not necessarily because the Fed suddenly thinks it needs to pullback on its inflation stance (though that is possible as well). Oddly, Bloomberg mentions every possible source of future Treasuries’ buying but the most probable – the Fed reversing course. When the QT chickens come home to roost, the Fed might find itself without much in the way of choices.

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