We have updated the data we promised in our recent post of a repost, Where The Next Financial Crisis Begins. Our narrative for why the Treasury market is convulsing with a lack of liquidity is that the largest buyers of notes and bonds over the past twenty years have been central banks, both the Fed and foreign, and now have become net sellers. This will have huge implications for other markets.
It’s just simple math, folks. The money to finance the U.S. deficits has to come from somewhere. With the central banks gone, it is now a zero-sum game.
Time to familiarize yourself with the term “crowding out.”
More narrative to come.