Summary: Before the latest with Blue Owl, money dealers have been anticipating more with them and others. Basically, thinking ahead to Stage 2 even while most in the mainstream saw chances diminished or eliminated. After all, the repo mess of December appeared to have been successfully eliminated by January. Instead, this week has been a lesson in listening to those dealers. The Fed’s repo window came roaring to life, Blue Owl opened Stage 2, and the macro data (esp. incomes) proved nothing had changed in the “hiring recession” economy. All of it rewards what is a massive FOUR HUNDRED BILLION inventory of UST defensiveness.

Summary: The idea of a global end to the rate cutting cycle has taken a huge hit recently - to the point, one of the few actually hiking is now closer to turning around and cutting than any of the other rate cutters other than RBA are to begin hiking. From commodities to north North American CPIs, bond yields in USTs, Canada, Switzerland even JGBs, recessions in Japan plus, yes, Switzerland. Reflation 2026 never stood a chance.

Summary: While we wait for the next report from the US BLS on payrolls, the ECB’s BLS on banking for the fourth quarter had a ton to say. Europe’s banks shocked observers and ECB researches with what they reported. It shouldn’t have been even a modest surprise given what really happened over the final three cockroach months of 2025. While hardly unexpected, the implications of this confirmation are enormous. That’s particularly true given the latest jobs data this time from Canada. More “unexpected” flat Beveridge.

Summary: Silver is no longer parabolic, the price is now going straight upward. The question many are asking is why. Is this reflation, inflation, maybe the first rumble of hyperinflation? We have historical examples to draw on not to mention the behavior of other influences. In one of those, copper is behaving a lot like silver, if not to that extreme. So, the question is whether copper and silver together outduel gold taking the other side. The answer, it turns out, comes down to what the Chinese believe. And do.

Summary: The JGB selloff has reached extreme proportions and thereby stoking all kinds of confusion about why it has happened. Since many assume it is about the Japanese government’s absurdly awful fiscal position, it has been further asserted this vigilantism will end up sweeping the world’s bond markets very quickly. A nice story and actually a far more preferable outcome, however what’s happening in JGBs is the other side of JPY as translated via BoJ. You don’t have to take my word for this.

Summary: December’s CPI won’t finally kill off tariff inflation, though it should. The idea remains on life support solely because Economics isn’t a science, and those who follow it aren’t interested in facts or truth. How did it get to be this way? Why did expectations theory become so irredeemably embedded in this mainstream? As is usual, in the absence of credible information and factual assertions, Economists were left to just make up ideas to explain the world using their version of entrails and tea leaves. Tariff inflation is merely the latest to expose the sham.

Summary: Jay Powell announced he is likely under criminal investigation from the DOJ about potentially having lied to Congress. This is supposed to be a HUGE deal, and in political circles it is being treated as such. Where anything matters, however, [insert shrug emoji here]. The Fed has been independent of the government, it has worked closely with political authorities, it has gone in other ways. None of it matters today just like it didn’t from a quarter-century ago and before. The only reason why this has come up is because “both” sides are starting to realize the truth - several of them.

Summary: The lawyer sharks now circling Blue Owl ‘get it’, as in what’s really happening. European banks proved it in October and November by undertaking the largest shadow bailout of shadow banking yet seen. It was foreign officials using their reserve assets who first alerted this trend, and now it has been confirmed all over the place. Not only that, the confirmation shows it’s still escalating whether anyone mainstream-wise sees it or not.

Summary: All of our “favorite” topics erupting all on the same day, the one which just happens to be right before the Federal Reserve’s December decision. After going through everything, it again becomes clear whatever the FOMC decides tomorrow matters very little, if nothing at all. What does? More trouble with First Brands, an eye-popping development with its DIP. Term repo rates have already soared and there’s still two weeks before the real year-end starts. Finally, JOLTS showed up for both September and October. Job openings jumped but everything else was recession-level ugly.

Summary: More confirmation China’s economy is accelerating to the downside. The country’s official services PMI slid below fifty to its lowest since Zero-COVID while manufacturing just set a record for the amount of time spent consecutively in contraction. And that’s only the beginning, as more is coming out among critical property developers like China Vanke. Beijing may have also changed up its priorities where it comes to the bankrupt real estate giants, too. Also, an update where US$ repo stands starting December.

Summary: It’s time for a rant on a topic that has bothered me for a very long time. It has forced its reappearance at a critical time, too. While it might not seem like a big deal at first, this goes straight to the heart of the biggest factors the economy and the world are wrestling with as we close out 2025. The background for this discussion is more confirmation of job shedding in the US economy. As a result, bills are all-in on next week’s rate cut.

Summary: This one takes things up several more notched. Not only does it have hedge fund redemptions, this is a well-known name and its actions taken in response to those requests is only going to make everything a lot worse. In these situations, everything comes down to trust. Instead, during the worst cases, that gets quickly eroded by a lack of information, and by reactions that become shadier and more questionable the more obvious the desperation. This one is up there on those counts.

Summary: Geopolitics violently reshaped the WTI futures curve right out of contango and into sharp backwardation again. While this is not uncommon, in this case it’s a bit volatile anyway. In spite of that, the WTI signal remains which is a much bigger fact than most people fear. The reason is the level of stupid that took place in the bubble credit period and why it did. There’s a lot more to it than the public might appreciate. One central banker already mentioned parallels to 2008, and this is the chief one made all the more relevant by more usage of the Fed’s repo, elevated SOFR, not to mention the likely imminent end of QT.

Summary: WTI futures quickly back into contango and recent developments in all three fundamental factors priced into the curve show why. It’s not just or even “a” supply glut. It is the combination of tight financing (more in Fed repo and SOFR today), lack of demand (confidence and holiday spending in the US) before finally oil supply (why Saudi Arabia “has” to produce now). Whatever might be left of the geopolitical premium in crude prices it is being overwhelmed by everything else. And that means a lot more than contango; in fact, it’s what contango means for everything else.

Summary: Monetary matters have force their way to the forefront, all because of payroll reports even as the next one remains delayed. Indicated eurodollar tightening has roared in several ways, starting with repo fails. Those don’t appear to be strictly quarter-end technical, either, with other indications strongly pointing toward risk aversion interrupting cash and collateral flows. In addition to payroll data, today the ISM’s service index also spotlights the likely macro suspect in everything. Shadow credit is not a fan of flat Beveridge.

Summary: Gold keeps flying pressing the copper-to-gold ratio down to more than just a new record low. This is getting utterly insane. Part of that may be bullion is overextending its run, though there are legit fundamental reasons for the price surge. China’s bank situation appears to be deteriorating rapidly along with prospects for an already-beleaguered Chinese economy. All the recent data points to a collision between short run downside acceleration and the culmination of a nearly two decade-long depressionary journey that has China on the cusp of its own flat Beveridge.

Summary: Rather than forecasting from here how bad macro and money conditions might become, Argentina is back in the mainstream spotlight because it is caught up squarely in the eurodollar’s crosshairs. But what does that actually mean? Not only will we begin to answer that question, we’ll provide another important one adjacent to it: why doesn’t anyone know about this? What you’ll see is that the answer to the former is more understandable than the one to the latter.

Summary: Gold is finally breaking out, soaring a huge percent today reaching a new all-time high well north of $3500. The reasons why leave it with more upside. Those have nothing whatsoever to do with inflation or a “crashing” dollar. Quite the opposite. From Treasury bill yields to term SOFR, on the macro side with ISM, construction and consumer spending on services, the evidence for a flat Beveridge keeps getting bigger and that is what’s propelling gold. The fact bullion is massively illiquid just makes an even more robust signal.

Summary: It isn’t just right, it’s significant. More and more Economists and their like are admitting consumers were right. Their dour “vibe” the past few years really had been right after all. This isn’t merely an academic exercise meant to relitigate the past, however. Instead, if Economists are throwing in the towel on the upside, the same might be true for employers and then the shift in thinking becomes more than just, well, sentiment.

Summary: Waffles are back on the US rates menu, but they don’t seem connected to the slight back up in Treasury note yields. Instead, bills keep plowing lower. Anyway, most people simply want to know how low rates might end up going. We have a few ways of sketching a rough outline, starting with swaps then applying another new record low in CtG. In the real economy, getting to really low future ST rates was always going to be about Beveridge, though maybe not the one right now you were thinking.