Weekly Commentary: $12 TN And Counting

2025-12-06 05:20:26 ET

Money Market Fund Assets (MMFA) surged $132 billion last week to a record $7.654 TN - the largest increase since the week ended April 1, 2020 (massive covid-related QE). This week saw emerging market ((EM)) CDS drop five to 130 bps, the low since Q1 2018. What's the source of all this liquidity fueling loose conditions and market complacency?

Global finance is in the throes of history's greatest monetary inflation. Ongoing, unprecedented Credit expansion fuels this inflation. Excessive sovereign debt growth is the most conspicuous offender. Corporate debt markets have been booming. Garnering increasing attention, so-called "private Credit" emerged as a potent force in high-risk lending.

Below the surface - in the shadows yet at the epicenter - a Bubble in speculative leverage evolved into the driving force behind destabilizing liquidity overabundance. The Bubble thesis holds that unprecedented "repo" financing of Treasury and myriad "basis trades" - coupled with global "basis" and "carry trades" - has been the origin of Trillions of liquidity, inflating speculative Bubbles from sovereign debt, equities, AI, crypto, M&A, upper-end real estate, sports franchises, and global asset prices more generally....

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