Treasury Market's Unstable Growth Threatens Bank Capital
Business & Finance News Today | 2 Min News | The Daily News Now! · The Daily News Now!
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Show Notes
Barclays strategists warn of a structurally unstable U.S. Treasury market, now thirty-one trillion dollars, growing at nearly nine percent annually since two thousand nine. This rapid expansion, half the pace of bank capital growth since two thousand ten, has created a supply-demand crunch. The gap is due to exploding federal deficits and post-crisis rules slowing bank growth. This has led to routine Fed interventions, like the huge Treasury buys during the two thousand eight crash and the two thousand twenty COVID chaos. Signs of strain include cheaper Treasuries versus swaps and primary dealers grabbing fewer auction shares. The Fed now owns the markets stability, and without occasional interventions, banks pull back hard, proving volatility, shaky middlemen, and rescues are inevitable.
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