This Week's Economic Data and Bond Refunding Carry Repo Market Risks
• This week has important economic data like CPI revisions, unemployment rate, and the Quarterly Refunding Announcement that impacts bond supply.
• Historically fiscal policy was counter-cyclical, but since 2016 deficits have expanded regardless of economic conditions.
• With persistent deficits amidst QT, there could be issues in repo market functioning due to lack of bank reserves.
• The Quarterly Refunding Announcement composition matters T-Bills vs Bonds has different impacts on banks and markets.
• The article discusses the QRA and its effect on bonds and equities in further detail.