Luke Gromen: Here Comes The Repo Man

62 snips

Nov 12, 2025

Luke Gromen, founder of macro research firm Forest for the Trees, shares insights on the current financial landscape. He discusses the spike in SOFR/SRF rates and how recent repo market stresses echo 2019's turmoil. Gromen highlights the impact of AI on jobs and its sustainability, while emphasizing gold's role as a strategic asset amidst economic uncertainty. He also examines the complexities of US-Japan relations and the geopolitical stakes surrounding rare earth materials, offering a blend of market analysis and foresight.

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INSIGHT

Repo Stress Reveals Systemic Fragility

Rising SOFR/repo signaled funding stress tied to a ballooning TGA and heavy front-end bill issuance.
That strained repo funding could force hedge funds to de-gross and trigger disorderly Treasury and equity moves without Fed backstop.

INSIGHT

Standing Repo Acts As On-Demand YCC

The Fed used its standing repo facility to supply liquidity and calm repo rates rapidly.
That action functions as on-demand yield curve control even if not labeled QE.

INSIGHT

Markets Accept Central Bank Backstops

The Fed's balance sheet is already expanding again via short-end purchases and liquidity facilities.
Markets increasingly accept central bank backstops, reducing stigma for facility use and extending the cycle.

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Danny Moses hosts Luke Gromen, founder of Forest for the Trees, on the On the Tape Podcast. In this episode, they discuss the SRF and SOFR rates, recent stresses in the repo markets, and the US Treasury's actions to alleviate funding issues. Luke explains the systemic risks in the financial system, the influence of hedge funds in the US Treasury market, and compares the current repo market scenario to 2019's market upheavals. The conversation shifts to the implications of AI on jobs and the economy, potential credit market disruptions, and the sustainability of the AI CapEx cycle. They delve into the geopolitical dynamics with China, the critical role of rare earths, and the delicate balance in the US-Japan economic relations. The episode concludes with a discussion on gold as a strategic asset, Bitcoin's potential, and the future of monetary policy amid fiscal dominance and inflation.

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