{"id":68768,"date":"2024-06-29T14:02:53","date_gmt":"2024-06-29T19:02:53","guid":{"rendered":"https:\/\/olduvai.ca\/?p=68768"},"modified":"2024-06-29T14:02:53","modified_gmt":"2024-06-29T19:02:53","slug":"scary-stat-alert-the-government-liquidity-index","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=68768","title":{"rendered":"Scary Stat Alert: The Government Liquidity Index"},"content":{"rendered":"
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Scary Stat Alert: The Government Liquidity Index<\/a><\/h3>\n

Obscure but historically accurate crash signal<\/strong><\/p>\n<\/div>\n

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Not that we need any more scary statistics, but here\u2019s one that might be worth watching. From the\u00a0Brave browser\u2019s<\/a>\u00a0AI summarizer:<\/p>\n

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Government liquidity index<\/strong><\/h4>\n

The government liquidity index is\u00a0a metric that measures the ease or difficulty of trading in government securities, such as U.S. Treasury bonds<\/strong>. It is a gauge of deviations in yields from a fair-value model, indicating the level of liquidity in the market.<\/p>\n

Measures of liquidity in the Treasury market are near crisis levels, raising concerns about underlying fragility in the functioning of the market. This can lead to historically large daily swings in yields, making it difficult for traders to carry out trades.<\/p>\n

Government Intervention<\/strong><\/p>\n

In response to these concerns, the U.S. Treasury has announced that it will begin regularly buying back its bonds starting May 29, for the first time in over two decades. This move is aimed at improving liquidity in the market and reducing the risk of market mayhem.<\/p><\/blockquote>\n

In a\u00a0recent tweet<\/a>, market analyst\u00a0Tavi Costa<\/a>\u00a0explains what this means:<\/p>\n

The liquidity index for US government securities is deteriorating significantly, now at its worst levels since the European debt crisis in 2011.<\/p>\n

Notably, it\u2019s already more severe than the environment during the Covid crash in 2020.<\/p>\n

What is even more alarming today is that this is all happening while the US currently has one of the largest interest rate differentials compared to other developed economies in history, yet liquidity appears to be eroding.<\/p>\n

This situation is setting the stage for the US to experience its own \u201cBank of England moment\u201d as we approach elections.<\/p>\n

In September 2022, UK yields saw one of the steepest increases in history after the announcement of \u00a345 billion in unfunded tax cuts, which raised concerns over increased borrowing needs and debt sustainability.<\/p><\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Scary Stat Alert: The Government Liquidity Index Obscure but historically accurate crash signal Not that we need any more scary statistics, but here\u2019s one that might be worth watching. From the\u00a0Brave browser\u2019s\u00a0AI summarizer: Government liquidity index The government liquidity index is\u00a0a metric that measures the ease or difficulty of trading in government securities, such as […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,7544,34741,843],"class_list":["post-68768","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-john-rubino","tag-liquidity-index","tag-us-government"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/68768","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=68768"}],"version-history":[{"count":0,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/68768\/revisions"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=68768"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=68768"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=68768"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}