THE GODS OF THE MARKET IN THE END RULE
And there was a great wind in the REPO market, and lo a great crying was heard and the clash of cymbols, drums and mysterious thunder.....etc....etc
In 2007/08 wall street tried to "maintain" the mortgage security market by sacrificing their balance sheets.
Didnt work out too well If i remember correctly.
Resulted in quite a few sacrificial victims to the gods of the market.
Fast forward to 2019.
They are again sacrificing their balance sheets to maintain the treasury market.
Won't work out too well this time either.
There is a reason a lot of banks wont lend at the higher rates.
They know that the money is being used for a losing purpose!!!!!!!!!!
The fact is that cheap repo money maintained the hedge funds in their leveraged treasury plays.
The cheap repo money is gone and these trades are now money losing and need to be unwound.
Its not going to be pretty.....not pretty at all.