It was back in February when we first said that (almost) nobody was paying attention to the "mind-boggling liquidity" that was about to hit the markets in the form of hundreds of billions in cash released from the Treasury's TGA account held at the Fed. This historic liquidity injection by the Treasury and not the Fed (which continues to this day to inject $120BN in liquidity monthly from its ongoing QE) was, as we put it, a form of backdoor QE, which would push asset prices higher and depress real rates. And while everyone knows that stocks have galloped higher since then - the S&P is now effectively at its all time high of 4,200, up from 3,800 at the start of the year, how has this tidal wave of liquidity impacted rates? As DB's Francis Yared writes in his "chart of the day", while the US Treasury has disbursed significant amounts of its latest stimulus in March, a move which would be typically associated with higher real rates, US real rates have ...
"La verità passa per tre gradini: prima viene ridicolizzata, poi viene contrastata, infine viene accettata come ovvia" (A. Schopenhauer)