Post-cap Wells Fargo notably increased balance sheet intensive activities like repo and their securities inventory. That likely contributed to a lower RRP and wider swap spreads. This hints at what future reductions in bank balance sheet costs could do. https://t.co/E0mxVFUdXn

Markets Weekly October 25, 2025 6% Mortgage Still Too High Big Day for Argentina Gold and Silver Implode https://t.co/DkensjtEQY

It looks like foreign official sector doesn't like to park securities at the Fed any more. Big drop in custody holdings, but TIC data does not show a decline in foreign official Treasuries. So they still want Treasuries, just don't want to keep them at the Fed.

Strange that there were not big net outflows yesterday.

Some videos doing the rounds about "basis trades", how they will blow up the world because overnight repo rates spiked a couple of basis points. These are getting huge amounts of views and likes, as anything that is completely wrong and doomer-ish always does, because it's the

Slight pullback in gold last week was met with big inflows into GLD. Looks like they are clamoring to get in.

Rare earths is the new AI 😂

Repo rates have gone up largely because the demand for repo financing is insatiable. When you run a forever $2t deficit you need a lot of financing, including from leveraged investors. Any Fed balance sheet stuff is secondary.

SOFR trading about IOR is totally normal. It has traded that way for months in the past. All that means is that demand for repo financing is exhausting MMF cash, and going forward marginal financing will come from bank treasurers whose opportunity cost is IOR.

Markets Weekly October 18, 2025 Regional bank scare Economy still fine Gold and Silver ascend https://t.co/nRrRYsNU8G

In a new note, we demonstrate that the massive buildup in hedge fund Treasury positions in the past decade has had substantial effects on the national accounts data. This is due to underreporting to TIC of Cayman Islands Treasury holdings associated with these hedge funds.

Find out soon. https://t.co/yvYQozadKG

WSJ reports that Beijing's strategy is to tank the stock market and force Trump to offer big concessions. https://t.co/JDLIaRZlJR

I wish Trump would come back twitter. Truth social seems so scammy and is filled with bizarre ads.

Ending QT sounds dovish, but the balance sheet's final form could be pretty hawkish. That is what commentary so far suggests, even from the dovish members.

Powell's claim that IOR doesn't cost tax payers just isn't true. As he notes, Fed income is remitted to Treasury. IOR increases Fed interest expense, which reduces Fed income. So the higher IOR, the less remittance to Treasury. (btw there are still good reasons to have IOR)

Note that short term borrowings increased with repo assets, so it's likely matched book where they can borrow from money funds and lend. This way MMF don't have to park cash in RRP.

https://t.co/tMpxT3EI6o

Looks like lifting the WFC asset cap is creating enough balance sheet capacity that RRP didn't have to spike on quarter-end. @amital13 shows WFC vastly increased their repo last quarter, and we did not see the RRP surge we usually see on quarter-end.

Sounds like China can get everything they want if the stock market were to go lower.