A $300 Billion Liquidity Storm May Be About To Hit The Market

A more than $300 billion liquidity drain from a rising Treasury General Account is expected to tighten financial conditions and could end the current equity rally. Reserve balances may fall to $2.8 trillion-$2.9 trillion, and with no reverse repo buffer to absorb the shock, the article warns of heightened market risk across rates, credit, and equities.

Analysis

A more than $300 billion liquidity drain from a rising Treasury General Account is expected to tighten financial conditions and could end the current equity rally. Reserve balances may fall to $2.8 trillion-$2.9 trillion, and with no reverse repo buffer to absorb the shock, the article warns of heightened market risk across rates, credit, and equities.