What everyone gets wrong about the current repo market

In this conversation, Pascal Huegli and Lighthouse Macro (Bob Sheehan) discuss the current state of funding and treasury markets, emphasizing the importance of liquidity and the systemic risks posed by regional banks. He highlights the impact of government actions on market stability and the growing influence of Bitcoin and crypto on traditional financial systems. The discussion also covers shifts in treasury market buyers and the pressures faced by primary dealers, concluding with insights on future risks and the evolving landscape of macro strategy.

Chapters:

00:00 Intro
01:16 Introduction to Lighthouse Macro and Bob's Background
04:11 The Current State of Quantitative Tightening
07:18 Understanding Bank Reserves and Their Importance
09:58 Regional Banks and Systemic Stress
11:45 Measuring Ample Reserves and Stress Indicators
14:16 The Impact of SOFR and Interest on Reserves
17:15 Government Shutdown and Its Effects on Liquidity
19:17 How to play this as an investor
28:16 Shifts in Treasury Market Demand and Supply
31:53 The Surge in Treasury Debt
34:00 Primary Dealers and Market Pressures
36:36 Regulatory Relief and Market Dynamics
39:06 Signs of Deterioration in the Treasury Market
43:46 Volatility as a Feature in Bonds
50:32 Crypto's Impact on Treasury Markets
57:48 Why Bitcoin is too big to fail

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