What Will Cause The Next Market Crash?
Many Happy Returns
The Problem With Household Borrowing
The Fed was a big buyer of treasuries, so there's less appetite for them now. The other problem is due to legislation because the Fed's been forcing banks to shrink their balance sheets. They can't buy lots of bonds in order to create a market. And that's made the bid off of spreads wider because the banks haven't got inventory. So they depend much more on the repo market to get the inventory off their balance sheet.
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