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Month end settlements

Summary:
Have to see if this large month end settlement pattern continues…. It may be that first of the month fiscal transfers are getting so large these days that they are destabilizing reserve assets at Depositories… so Treasury might be scheduling most of the settlements the day before to reduce reserve balances within the same regulatory period as the first of the month…Treasury issuance is not “borrowing!” despite what MMT asserts…Treasury issuance is skewed this month. There are net paydowns and one large settlement on month-end. If we exclude month-end, there's a net paydown of 8B. O/N rates should head lower throughout the month. Every net paydown will put additional downward pressure on O/N rates pic.twitter.com/3fTwWGMwmR— Scott Skyrm (@ScottSkyrm) May 2, 2024

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Have to see if this large month end settlement pattern continues…. It may be that first of the month fiscal transfers are getting so large these days that they are destabilizing reserve assets at Depositories… so Treasury might be scheduling most of the settlements the day before to reduce reserve balances within the same regulatory period as the first of the month…

Treasury issuance is not “borrowing!” despite what MMT asserts…







Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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