The fog is getting thicker… and the Fed’s balance sheet is getting larger. We are now into the acronym salad stage of the panic. The difference between now and 2008 is we had a lot of acronyms flying before the sharp selloffs.

I am a couple days late here flagging the MMLF intended to forestall runs on the money market funds and another ‘breaking of the buck’. Once again we are reminded of the superior quality of short term treasuries to holding money market funds for ‘cash’. Short term treasuries don’t have gates.

Chalk the MMLF to another positive signpost on the Fed intervention track. It’s not a sign of panic. The panic was already there. It’s a response.

Repo activity is just … to the moon. Does that describe it? It’s still not $1 tn. But POMO is headed rapidly up while TOMO is fluctuating. repo-analysis-20200319

An interesting coincidence – my worksheet now implies ~ $24 tn in ‘troubled assets’. I noted in this survey of recent market action, global assets seem to have lost about $25 tn in notional value, by their assertion. Just a random coincidence, I am sure. Yeah, I know, the Fed is not the only game in town. Never-the-less they are the pied piper for the time being, leading the rest of the USD-based system over the cliff.

How are Central Bank swap lines doing? Announcements are good for sure, but let’s look at reported Central Bank Liquidity Swap Operations. Unfortunately there is nothing meaningful reflected yet. ECB usage is totally normal, as I’ve had eyes on this before. ECB is typically a big end of quarter user and this level is typical ex-that. Keep watching FRA/OIS for indications of the money panic.

Stay healthy.

Avoid using the terms ‘social distancing’, ‘shelter in place’ or ‘flattening the curve’.

Just practice healthy habits and don’t use irritating catch-phrases that reflect media brainwashing.