Boom Times... Delayed

The central claim is that rising balances in the Federal Reserve's Reverse Repo Program (RRP) after Powell's Jackson Hole speech are draining dollar liquidity and weighing on Bitcoin, which gave back about 10% of its dollar price over the last week. RRP balances rose by roughly $120bn as money market funds chased the facility's 5.3% yield ahead of an expected September rate cut, and the text says a rising RRP sterilizes money that cannot be re-leveraged. The argument predicts that a 2024 rate cut would push 10-year Treasury yields toward 5%, a level at which Yellen injected liquidity last year, and that this would halt the stock rally and raise mortgage rates.