Huge Treasury borrowing is leading to funding pressures and distortions across stocks, bonds and credit.
Markets are starting to feel more acutely the effects of Leviathan’s insatiable appetite for borrowing. The onslaught of Treasury issuance is crowding out other borrowing and increasing the risk of a funding-driven correction in stocks, while also distorting the signal from credit spreads. Quantitative tightening is likely to be one casualty if stresses do not ease.
