Heatwave (Arthur Hayes)

Arthur Hayes argues that April 2024 will bring extreme weakness to risky asset markets, and that the Federal Reserve and US Treasury are quietly expanding dollar liquidity through the discount window and bank capital rules. He says the BTFP's expiry on March 12th did not trigger a crypto sell-off, as he had predicted, and that the discount window only accepts Treasuries and mortgage-backed securities. Hayes states that the Fed's new collateral rules leave insolvent banks able to avoid failure, and he estimates the insolvent US banking system's Treasury and MBS holdings at $4 trillion. He also says the ISDA has asked for a Treasury exemption from the supplemental leverage ratio, and he expects that proposal to be accepted.