3 Takeaways
Liquidity Stress Rising: Short-term funding indicators like SOFR and repo usage suggest liquidity is tightening sharply across U.S. money markets.
Watch Key Technical Levels: The S&P 500’s 6,650 trendline and Bitcoin’s support levels could signal larger downside moves if broken.
Fed Nearing QT Limits: Continued Treasury bill issuance and balance sheet runoff could soon force the Federal Reserve to pause quantitative tightening.
Market liquidity has tightened considerably as Treasury bill issuance and quantitative tightening continue to drain reserves, driving overnight funding rates sharply higher. These stresses are beginning to appear in equities,