Steven Blitz at TS Lombard.
July is when the funds rate finally became tight and Q3 is when QT finally turns restrictive. All the chatter about liquidity and the Fed b/s is just that – QT’s impact always depends on the direction of Treasury financing and nominal growth.
The coming jump in financing needs plus the add of what the Fed is no longer buying will raise real yields for the wrong reasons (increased private capital demands are the right reason) and the negative impact will be seen in capital markets.
