From Seekingalpha · Mott Capital Management · · 1m
T-bill Settlements Risk Market Liquidity
Next week's $106.1 billion T-bill settlements may drain market liquidity.
In brief
Next week's $106.1 billion T-bill settlements may drain market liquidity. Treasury bill settlements next week could weaken equity markets as historical data shows bearish bias on settlement days. Originally reported by Seekingalpha.
T-bill Settlements Next Week
Treasury bill settlements will inject $106.1 billion in net new cash next week.
Historical Bearish Bias
Historical data shows the S&P 500 and Nasdaq 100 exhibit a bearish bias on T-bill settlement days.
Net Issuance Impact
Net issuance periods correlate with weaker equity performance, while paydown periods support market strength.
Reverse Repo Depleted
With the reverse repo facility depleted, new T-bill funding sources may pressure market liquidity.
Previous Week's Activity
This past week, net new cash from bill settlements totaled about $62.6 billion.
Market Liquidity Risk
Treasury settlements next week will be heavier than this week's, creating a treacherous trading week.
Here's the gist
Treasury bill settlements next week could weaken equity markets as historical data shows bearish bias on settlement days.
