Eurodollar University WTF! You Won’t Believe What China Just Did to the Dollar
8 snips
Nov 30, 2025 China's massive Treasury sell-off signals deeper economic issues, highlighting a shift in global monetary dynamics. Rising repo volumes reveal tightening eurodollar conditions, contrasting with stock market highs. Jeff discusses how governments, like China, are raising dollars during economic stress, while private foreign buyers offset official sales for safety. The implications of collateral frictions and the dangers of using riskier assets in resales are also examined, raising concerns about systemic stability.
AI Snips
Chapters
Transcript
Episode notes
China's Sales Signal Dollar Tightening
- Rising Chinese Treasury sales confirm a summer-long eurodollar monetary tightening cycle.
- That tightening showed up as elevated repo and SOFR rates, and increased Fed repo borrowing.
Repo Spikes Show Last-Resort Funding
- Resale (reverse repo) volumes rose as eurodollar conditions tightened, signaling repo became a last-resort funding source.
- Higher resales likely reflect breakdowns in FX and swap funding pushing borrowers to onshore repos.
Collateral Frictions Replace T-Bill Use
- TIC data shows rising resale activity but less Treasury bill collateral returned after March.
- That suggests collateral-swap frictions forcing borrowers to post lower-quality collateral or sell assets.