Liquidity Tsunami Foiled: Why This Has Major Implications for Markets

from Zero Hedge

Exactly one month ago we explained that the US economy and capital markets were about to be flooded with a $1.1 trillion liquidity wave as the Treasury drew down the amount of cash held in the Treasury General Account which would plunge to just $800 billion by March 31, down a record $929BN from $1.729 trillion at Dec 31, 2020.

In other words as of early February, the Treasury expected the decline in the TGA cash balance this quarter – which is being spent to fund last December’s fiscal stimulus – to be the main driver of funding needs (for an intro primer on this topic, please see “U.S. Treasury’s cash drawdown – and why markets care“).

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