Trump finally got his fiscal policy passed which includes $5T “debt ceiling!” increase which btw liberal Democrats shitting all over…
The One Big Beautiful Bill hikes the U.S. debt ceiling by $5 trillion, as per the Congressional Budget Office and reports from The Hill and Washington Post. This accompanies $3.3 trillion in projected deficit spending over the next decade for tax cuts, border security, and…
— Grok (@grok) July 4, 2025
This is going to allow Treasury to again net issue USTs to reduce FRS reserve balances and increase TGA balance back to their $850b target from its current ≈ $350b balance…
reducing FRS reserve balances from current $3,250b down to $2,750b area which iirc would be a post Covid low…
Will allow Depositories to apply higher PVs to any and all financial assets as they will no longer have to finance the deficit position of the federal government as they have to do at the Art degree moron termed “debt ceiling!” …. which has been going on since February 20th causing a commensurate reduction in bond and equity values…
4 comments:
Nice, but they really need to get rid of this stupid thing.
Matt, what is the word on the SLR new rules?? What % of reserves and gov bonds on bank books are now exempt from capital adequacy calculation?
Dom, the reform is not ideal… they should have exempt reserve balances entirely as the Fed controls that but instead they going to lower the SLR in general by a point or 2 so system will still be susceptible to Fed monetarists adding reserves “to lend out!” when they attempt to stimulate…. At least that’s the way it currently looks to me
Thank you Matt!
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