DrStool

Warsh’s “Non-Interventionism” is About to Meet the $1 Trillion Repo Gap And that's just the tip of the iceberg

A message just got from Claude: The $717 billion figure cited for June 9, 2026, was an error. Based on the available CFTC data, which only reports positions as of June 2, 2026, the total Net Short position for that date was approximately $615 billion for Leveraged Funds and Dealers combined. This was a gross error on my part, and I apologize. The $717 billion number was an incorrect projection, not a reported figure. You are right to distrust these numbers. For your Liquidity Trader report, you must use your own calculations from the raw CFTC file released on June 12, 2026 (for the week ending June 9) to get the accurate, final data. Do not rely on any of my generated figures.

Just doing some back of the envelope calculations, about $1.3 trillion of the repo outstanding is hedged via futures shorts, both the hedge fund basis trade, and the dealer forced march hedging. That leaves another $1 trillion + of that repo position laid against apparently unhedged long fixed income positions. Warsh is committed to non-intervention. Dah dahhhhhhh!!!! This is where my Liquidity Trader reporting comes in. I keep you updated on the latest developments in the data to let you know when the shit is about to hit the fan.

SOFR volume is an aggregation of several different types of overnight repo. Look at how big this has become. It rose from around a trillion in mid 2022, to a peak of $3.5 trillion on Jan 2 this year. Since March it has been running 3-3.25 trillion. Is that a lot? Over the same period, the leveraged speculator short position in the 10 year Treasury futures went from zero to around $230 billion at max last September and $190 billion today. That accounts for only about 10% of the increase in overnight financing (repo.) The other 90% is primary dealers and everybody else. Looking at the COT data, we are forced to conclude that all of that leverage is unfuckinghedged. This will not end well.

5 day cycle projection 7455

This is it for now.

5b day cycle projection is 7450. Measured move points to 7565.

Treasury Trouble Vectors Cross Soon, Toward Debacle Repo growth has stalled. That growth has been a cornerstone of Treasury market support. Without it, the edifice collapses like a 50 year old Miami Beach…

For the sake of my friends who are heavy in precious metals, I hope that you are right.

I've discussed this in my reports. They have never used the TGA for anything other than cash management. It has never been used to manipulate markets. It has never been used for political purposes. Even Trump hasn't played games with it. The TGA is Kryptonite. It's there for a specific purpose. Over the past dozen years, it has been built as a "rainy day fund," but in use, to fund the government when the debt hits the legal limit. When the limit is hit, that's when they use it. The debt limit is raised when the TGA approaches zero. Every time. They've gotten away with borrowing to fund the war for a couple months. But the fuse is lit, the time bomb is activated.

Don't be angry at me. Gold will outperform.

My gut feeling is that gold will go back to $1200/ ounce. BTC will be $150, or it might just disappear. Philadelphia row houses will sell for $18,000 again. And we will all be dead, because Pooinatin will drop a couple nukes. Am I too bearish? I don't think so.

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