DrStool Posted September 22, 2021 Report Share Posted September 22, 2021 Why is this time different? I don't know about you, but to me, this looks like every other short term bottom we've had for the past dozen years. I guess it could be different, and maybe we'll know this morning. Trend resistance is at 4387-95 between 5 AM and 7 AM NY time. Around the NY open, those lines will be around 4380-90. If they don't clear those lines this morning, this could get ugly. The 5 day cycle projection for this up phase is 4310. They got to 4306 yesterday. I think that's close enough for government work, but we'll see. The trendlines see all and know all. We have Fed circus today. The charts are set up to send a signal one way or the other. By the same token, the Fed just finished settling $110 billion in MBS purchases from Primary dealers over the past week. This is the regular mid month thing that almost always triggers a rally as that week draws to a close. So far, judging by the market action, almost none of the cash has been committed to equities or fixed income. Where did it go? The Fed's RRP slush fund. The Fed RRP Slush Fund (RRPSF) rose from $1.087 trillion the day before the MBS settlements began to $1.240 trillion yesterday. The RRPSF rose by $153 billion. $110 billion was from the MBS, and the rest was courtesy of that little market selling panic last week. Sellers put the cash into MMFs, and the MMFs immediately plowed that cash into the RRPSF. What else can they do. There are no T-bills to be had. That will change as soon as the debt ceiling suspension is passed in the next couple of weeks. Source: NY Fed RRPSF page. I deliberately chose a start date for this chart of Feb 21. The RRPSF hadn't started yet. It was at zero. That was 2 days before the US Treasury began regularly paying down T-bills. The holders of the bills that got redeemed in the T-bill paydowns sent the cash straight to the Fed RRPSF. I've chronicled this regularly at Liquidity Trader. If you want to know what's going on with this stuff, and you should, then Liquidity Trader is for you. It's all about following the money. Subscription Plans If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter. Meanwhile, for your longer term infotainment and edification: Stock Market on the Brink Get Ready for the Coming Bond Market Bloodbath When Hope Is Not a Good Thing Lots of Sell Signals Again From Friday’s Swing Trade Screen Useless Banking Indicators Except for One Giant Red Flag Link to comment Share on other sites More sharing options...
jp6 Posted September 22, 2021 Report Share Posted September 22, 2021 It's another round trip after selling climax(14th Sep). ABC move should complete the Upside. It may complete by days end or tomorrow Link to comment Share on other sites More sharing options...
DrStool Posted September 22, 2021 Author Report Share Posted September 22, 2021 Jeezis. From September 16-28, Treasury paydowns total $229 billion. Wow. I had estimated that RRPs would hit $1.3 trillion before they start issuing bills after debt ceiling is lifted. RRPs Now at $1.24 trillion. Will definitely go over $1.3 trillion next week. Link to comment Share on other sites More sharing options...
potatohead Posted September 22, 2021 Report Share Posted September 22, 2021 1 hour ago, DrStool said: Jeezis. From September 16-28, Treasury paydowns total $229 billion. Wow. I had estimated that RRPs would hit $1.3 trillion before they start issuing bills after debt ceiling is lifted. RRPs Now at $1.24 trillion. Will definitely go over $1.3 trillion next week. thats a big slush fund Link to comment Share on other sites More sharing options...
Jorma Posted September 22, 2021 Report Share Posted September 22, 2021 1 hour ago, DrStool said: Jeezis. From September 16-28, Treasury paydowns total $229 billion. Wow. I had estimated that RRPs would hit $1.3 trillion before they start issuing bills after debt ceiling is lifted. RRPs Now at $1.24 trillion. Will definitely go over $1.3 trillion next week. It's pretty funny that they can't spend their cash down to the stupid statutory limit fast enough. Is the Treasury really doing 'extraordinary measures', and then paying down bills? It's Fed day again already? I'd like to ask Powell if he would support Texas banks remaining as part of the Federal Reserve system when they secede. Link to comment Share on other sites More sharing options...
DrStool Posted September 22, 2021 Author Report Share Posted September 22, 2021 They have to pay down the bills to stay under the debt limit because they're still issuing coupons. They'll be under $100 billion in cash by end of month. A little bump from EOM coupon issuance, but they gotta make the military pension fund contribution. First couple days of October is always when this debt ceiling shit comes to a head. Makes US look like a clown banana republic. Link to comment Share on other sites More sharing options...
Mkucstars Posted September 22, 2021 Report Share Posted September 22, 2021 We are a clown banana republic. Most don't see it yet or refuse to admit it. Link to comment Share on other sites More sharing options...
Mkucstars Posted September 22, 2021 Report Share Posted September 22, 2021 It's rather embarrassing. Link to comment Share on other sites More sharing options...
potatohead Posted September 22, 2021 Report Share Posted September 22, 2021 15 minutes ago, DrStool said: They have to pay down the bills to stay under the debt limit because they're still issuing coupons. They'll be under $100 billion in cash by end of month. A little bump from EOM coupon issuance, but they gotta make the military pension fund contribution. First couple days of October is always when this debt ceiling shit comes to a head. Makes US look like a clown banana republic. how big is the military pension fund contribution? not sure I saw it in your reports. Link to comment Share on other sites More sharing options...
DrStool Posted September 22, 2021 Author Report Share Posted September 22, 2021 I don't know. I mentioned it as something I remembered from past debt ceiling showdowns. It's big, but I don't remember how big. I tried to track it down but could not find anything on it. Link to comment Share on other sites More sharing options...
DrStool Posted September 22, 2021 Author Report Share Posted September 22, 2021 It will be a showdown the first week of Oct. Link to comment Share on other sites More sharing options...
DrStool Posted September 22, 2021 Author Report Share Posted September 22, 2021 I did mention it in a recent report but because I couldn't find anything specific published about it I was very hazy. I'm pretty sure my memory is right Link to comment Share on other sites More sharing options...
DrStool Posted September 22, 2021 Author Report Share Posted September 22, 2021 5 day cycle projection now 4433 Link to comment Share on other sites More sharing options...
Mkucstars Posted September 22, 2021 Report Share Posted September 22, 2021 I just want to know if Kaplan is long or short right now... Link to comment Share on other sites More sharing options...
MisFit Kid Posted September 22, 2021 Report Share Posted September 22, 2021 Link to comment Share on other sites More sharing options...
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