Eurodollar University T BILL Carnage Begin: The First Sign of Financial Collapse
Dec 8, 2024
This week sees a shocking surge in interest for the eight-week Treasury bill, raising eyebrows across financial markets. Labor statistics tell a troubling story of rising unemployment amid economic optimism. Collateral shortages intensify concerns about a potential financial collapse. The dynamics of Treasury bill auctions reveal intriguing patterns that hint at recession risks. As market expectations shift, the complexities of term SOFR and implications for Federal Reserve policies come into sharp focus.
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Market Skepticism of Strong Economy
- Heavy buying of 8-week Treasury bills occurred before the payroll report, similar to last month.
- This, along with other market indicators, suggests financial players doubt the "strong economy" narrative.
Weakening Labor Market
- The household survey shows declining employment and labor force participation for two consecutive months.
- The adjusted unemployment rate, considering those leaving the labor force, is higher than the official rate, indicating a weakening economy.
Soaring Demand for Treasury Bills
- While the Treasury Department reduced bill supply, demand, especially for 8-week bills, soared.
- This unusual surge points to factors beyond just Fed rate cut expectations.