Amid These Results, Hyperliquid's HYPE Token Registered a new all-Time High of $57.30 on Sept. 12, up by Youghly 760% Since its Launch.

Cryptocurrency

Summary:

Amid these results, Hyperliquid's HYPE token registered a new all-time high of $57.30 on Sept. 12, up by roughly 760% since its launch.

Decentralized derivatives exchange Hyperliquid has consistently outperformed traditional finance giants in terms of volume and net income.

DefiLlama data estimates Hyperliquid’s annualized net income at $1.24 billion as of Sept. 12, exceeding Nasdaq’s $1.12 billion net income for the entirety of 2024 by 11%.

The comparison positions the DeFi platform ahead of one of the world’s largest stock exchanges in net income, despite operating with just 11 team members.

Additionally, data from ASXN shows Nasdaq employed 9,162 people in 2024, producing a net income per employee ratio of $123,335.52.

Hyperliquid’s 11-person team generates approximately $113 million per employee, establishing the highest net income-to-employee ratio in global financial markets.

Volumes surpass Robinhood

The trading protocol posted $420.3 billion in total trading volume during August, extending its winning streak against Robinhood to four consecutive months.

Robinhood published August trading figures on Sept. 11, revealing $227.5 billion in total volume across all products.

The breakdown included $199.2 billion from equity trading, $195.5 million from options contracts, $13.7 billion from crypto trading in the Robinhood App, and $14.4 billion from crypto trading on the Bitstamp exchange.

Hyperliquid processed $398 billion in perpetual contracts and $22.3 billion in spot trading during the same period, creating a $170.5 billion volume advantage over the retail trading platform. The August performance marks the platform’s strongest monthly showing since beginning its winning streak against Robinhood.

The volume comparison traces back to May, when Hyperliquid first overtook Robinhood with $256 billion versus $192 billion, according to data shared by Jon Ma from Artemis.

June volumes reached $231 billion for Hyperliquid compared to Robinhood’s $193 billion, followed by July’s $330.8 billion versus $237.8 billion performance. Its July advantage represented its largest monthly gap at 39.1% before August’s results widened the margin further to nearly 85%.

Amid these results, Hyperliquid’s HYPE token registered a new all-time high of $57.30 on Sept. 12, up roughly 760% from its launch price of $6.51 on Nov. 28, 2024.

The platform continues to demonstrate how decentralized exchanges can compete directly with established retail trading platforms while maintaining lean operational structures that generate outsized returns per employee.

Source: Cryptoslate

Risk Warnings and Disclaimers

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Manuel

Stocks

Political

Vaccine makers’ shares fell after a report that Trump health officials plan to link Covid shots to the deaths of around two dozen children in a presentation to advisers to the Centers for Disease Control and Prevention next week.

The Washington Post reported Friday that a group of health officials appear to have used the Vaccine Adverse Event Reporting System, or VAERS, to tie the deaths of 25 children to Covid vaccines. A high-profile advisory committee that Kennedy revamped to include vaccine critics is scheduled to discuss the shots from companies including Pfizer Inc., Moderna Inc. and BioNTech SE at its meeting next week.

Moderna shares dropped as much as 8.7% during trading in New York Friday. Pfizer shares fell as much as 3.6%. BioNTech’s US-traded shares sank as much as 14%.

Covid vaccines have become a political flash point in recent weeks as conflict between Health and Human Services Secretary Robert F. Kennedy Jr. and former CDC director Susan Monarez led to her ouster just weeks into her job. Kennedy has previously claimed that the shots crafted during President Donald Trump’s first administration — largely credited with saving millions of lives during the pandemic — cause deadly complications, despite rigorous studies involving millions of people that found serious side effects are rare.

VAERS collects copious amounts of unfiltered data in an effort to detect early signs of side effects. Reports can be submitted by anyone and no effort is made to verify the details or prevent duplication, a format that scientific researchers said makes it difficult to draw clear conclusions.

“FDA and CDC staff routinely analyze VAERS and other safety monitoring data, and those reviews are being shared publicly through the established ACIP process,” HHS spokesperson Andrew Nixon said, referring to the Advisory Committee on Immunization Practices.

Pfizer could not immediately be reached for comment. BioNTech did not immediately respond to a request for comment.

In a statement, Moderna said the safety of its Covid vaccine, Spikevax, is “rigorously monitored” by the company, the FDA and regulators in more than 90 countries. Safety monitoring systems have not identified any new or undisclosed safety concerns in children or in pregnant women, the company said, adding that research “continues to demonstrate a favorable risk–benefit profile for Spikevax.”

A 2022 Lancet study of heart inflammation in adolescents and young adults who received messenger RNA Covid-19 vaccines found no known deaths, with most patients recovering within 90 days.

The Data System

The Food and Drug Administration had already indicated it was investigating reports of children dying due to the Covid vaccine.

“There have been children that have died from the Covid vaccine,” FDA Commissioner Marty Makary said in an interview with CNN’s Jake Tapper earlier this month. “We’re doing a proper investigation. We’re going to release a report in the coming few weeks.”

Patients, health-care providers, caregivers and companies are encouraged to notify the agency about adverse events following immunization, “even if they are not sure the vaccine caused the problem,” according to the CDC, which manages the VAERS database with the FDA.

Yet VAERS warns that some of these reports “represent true vaccine reactions and others are coincidental adverse health events and not related to vaccination,” according to its fact sheet. “Overall, a causal relationship cannot be established using information from VAERS report alone.”

For 2021 alone, there were more than 11,000 reports of deaths. While many mentioned Covid shots, it’s impossible to know from the database alone if they stemmed from the shots. Many of the submissions detailed “breakthrough” Covid infections, the ones that happened after a patient was vaccinated. This makes it possible that the virus — not the shot — was deadly.

Even Kennedy has raised concerns about the system’s reliability. “It’s outrageous that we don’t have a surveillance system that functions,” he said at an event in Indiana in April.

Kennedy has long said that the government should focus more on vaccine injuries. Before taking office, he made money connecting people with claims of vaccine harm to a law firm that sued manufacturers. More recently, his allies in Congress have hosted hearings featuring people who said their family members experienced vaccine injuries.

The Washington Post report came as the as the CDC reported that Covid hospitalization rates are peaking nationwide. The virus has contributed to more than 15,000 deaths in 2025 through the first week of September, according to the agency.

Source: Bloomberg

Risk Warnings and Disclaimers

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Kevin Du

Political

President Donald Trump has repeatedly deployed the US military for domestic assignments. In June, he summoned the Guard and the Marines to Los Angeles — over the objections of local leaders — to subdue protests against his administration’s mass arrests of migrants. And in August, Trump called up the Guard to combat violent street crime in Washington, DC.

The president has repeatedly suggested he will extend the campaign to other cities. “We’re going to Memphis,” Trump said on Sept. 12, adding that he believes the city is “deeply troubled.” Trump has also discussed plans to deploy troops to Chicago and New York City.

Trump also issued an executive order directing Defense Secretary Pete Hegseth to create “National Guard units around the country specifically trained and equipped to deal with public order issues,” as the president said at a press conference.

Trump’s actions mark a sharp departure from his predecessors. Historically, US presidents have made sparing use of the armed forces for missions within the nation’s borders, a legacy of resistance to the presence of British soldiers in the colonies in the 1700s. Trump’s mobilization of the military domestically has drawn sharp criticism from Democrats as an authoritarian abuse of power.

In 2018, during Trump’s first term, his defense secretary, James Mattis, authorized the deployment of up to 4,000 National Guard troops to the US-Mexico border to support federal agents with surveillance and logistics for immigration enforcement.

In 2020, more than 30 state governors used National Guard troops to curb protests that erupted after the murder of George Floyd in Minneapolis. Two years later, former Defense Secretary Mark Esper testified to a House committee that he and others had needed to persuade Trump not to deploy active-duty troops — those serving in the Army, Navy, Air Force and Marines — in US cities as well. At the time, Trump felt the widespread unrest made the US look weak, Esper told the committee.

As Trump campaigned for a second term, he made clear he wanted to be more aggressive in using the military. At an event in Iowa in 2023 he labeled several big cities “crime dens” and said he had previously been held back from sending in the military.

Following up on his vow to target an estimated 11 million immigrants who are in the country illegally, Trump in January ordered a new deployment of Army soldiers and Marines to the border to help block migrants from crossing without authorization. The Defense Department said at least four military planes would be used to help carry out deportations of about 5,000 detained migrants from El Paso and San Diego. As of early July, about 8,500 military personnel were stationed at the border.

In June, the president sent 4,000 National Guard troops and about 700 US Marines to Los Angeles for 60 days amid protests against immigration raids in the nation’s second-largest metropolitan area. In July, after protest activity faded, most of the troops were recalled.

In early August, Trump announced he would take federal control of Washington, DC’s police department and deploy National Guard troops there, escalating his push to exert power over the nation’s capital. On Aug. 12, troops began arriving in the city. As of Aug. 26, about 2,200 National Guard soldiers had been deployed to Washington.

On Aug. 22, The Pentagon said that National Guard troops deployed to Washington will begin carrying firearms. The order was a reversal for the Army, which had said on Aug. 14 that weapons would be available but “remain in the armory.”

The law strictly limits the federal deployment of troops within US borders.

The US Constitution provides that neither the president nor Congress can use the armed forces to carry out their policy agenda without consent from the other branch. Domestic deployment of active-duty military personnel has historically been viewed as an option of last resort.

The 1878 Posse Comitatus Act, along with amendments and supporting regulations, generally bars the use of the active-duty US military from carrying out domestic law enforcement. Important exceptions to the 1878 law are contained in the 1807 Insurrection Act and its modern iterations, which allow the president, without congressional approval, to employ the military for domestic use in certain extreme circumstances. The Insurrection Act has been used very rarely to deploy troops under federal control domestically without a request from a state government, and modern examples mostly date from the Civil Rights era.

Occasionally, a president has deployed National Guard troops to respond to civil unrest and rioting, but almost always at the request of a state’s governor. President Lyndon Johnson, for example, sent National Guard soldiers under federal control to Detroit, Chicago and Baltimore to help quell race riots in the late 1960s after governors asked for help. Likewise, President George H.W. Bush activated the California National Guard in 1992 at the request of Governor Pete Wilson and Los Angeles Mayor Tom Bradley when rioting broke out in the city following a jury’s acquittal of police officers charged with severely beating a Black man, Rodney King, after a high-speed car chase.

The last time a president activated a state’s National Guard without a request from the governor was in 1965, when Johnson used the guard to protect civil rights demonstrators in Alabama after the governor refused to do so.

In recent decades, both Republican and Democratic presidents, including George W. Bush and Barack Obama, have relied on the National Guard and active-duty military members to reinforce US Customs and Border Protection with tasks including engineering, aviation and logistical support. But Trump has gone further by creating military zones along the US-Mexico border where troops can detain migrants without running afoul of restrictions on their involvement in domestic law enforcement.

Trump has repeatedly signaled he might invoke the Insurrection Act, though he has not done so. Instead, the Trump administration has justified deployments by arguing that local and state officials have failed to restore order in their jurisdictions. In his takeover of policing in the District of Columbia, Trump declared a public safety emergency under a provision of DC’s Home Rule Act that allows him to temporarily assume control of the city’s Metropolitan Police Department.

In Trump’s announcement of the DC deployment, he painted a nightmarish picture of a Washington that’s been “overtaken” by “bloodthirsty criminals” and “roving mobs of wild youth.” That was at odds with a finding from the Justice Department in January that violent crime in the capital reached a 30-year low in 2024.

To unilaterally dispatch the California National Guard to Los Angeles, Trump cited a provision of Title 10 of the US Code that permits the president to deploy the guard in cases of invasion by a foreign nation, a rebellion, or danger of a rebellion. Under this statute, troops are still not permitted to do civilian law enforcement.

On June 7, the president issued a proclamation giving Hegseth the authority to direct troops to take “reasonably necessary” actions to protect immigration agents and other federal workers and federal property. It also permits him to use members of the regular armed forces “as necessary to augment and support the protection of federal functions and property in any number determined appropriate in his discretion.”

On June 9, California Governor Gavin Newsom filed a lawsuit challenging the Los Angeles deployment. Following a three-day trial in August, US District Judge Charles Breyer ruled on Sep. 2 that Trump’s actions “willfully” violated the Posse Comitatus Act.

Breyer rejected the administration’s argument that concern about the ability of federal employees to do their jobs without interruption was an exception to the Posse Comitatus Act, saying that such an exception “would be limitless in principle.”

In Los Angeles, the president’s move to stop what he called “migrant riots” was condemned as inflammatory and unnecessary by local officials, including Mayor Karen Bass and Newsom, who would normally be responsible for requesting such a mobilization.

DC Attorney General Brian Schwalb sued Trump on Aug. 15, alleging the president exceeded his authority in taking control of the Metropolitan Police Department and deploying hundreds of National Guard troops to the nation’s capital. At a judge’s urging, US Attorney General Pam Bondi agreed to let DC police chief Pamela Smith remain in charge of her department, while directing DC Mayor Muriel Bowser to assist with federal immigration enforcement and enforce laws barring homeless people from occupying public spaces.

Pritzker and Chicago Mayor Brandon Johnson condemned Trump’s warnings that he may deploy troops to Chicago and other cities.

“After using Los Angeles and Washington, DC as his testing ground for authoritarian overreach, Trump is now openly flirting with the idea of taking over other states and cities,” Pritzker said. “Trump’s goal is to incite fear in our communities and destabilize existing public safety efforts — all to create a justification to further abuse his power.”

Source: Bloomberg Europe

Risk Warnings and Disclaimers

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Adam

Economic

An executive order signed last month by President Donald Trump aims to make it easier for workplace retirement plans like 401(k)s to offer investments in alternative assets, like private equity and private credit.

Supporters of the idea believe it would “democratize” access to investments that largely have been available only to institutions and very wealthy individuals. They say it would provide retail investors better exposure to the whole economy since so many companies choose to remain private.

It’s also touted as a chance for ordinary investors to potentially get better long-term returns on their money. But is that true?

The question of how private markets have performed relative to public markets is the subject of debate. So the answer you get depends on who you ask, what studies they’re referring to and the metrics they choose to compare.

Different metrics lead to different outcomes

While some studies say private markets have outperformed, others say that they haven’t.

This discrepancy is driven in part by which public benchmarks researchers use for comparison, what type of private funds they analyze, how they calculate the private funds’ returns and what timeframes they choose for measuring performance.

For starters, there is no index for private assets that is comparable to public market indexes like the S&P 500 or Russell 2000. So you can’t make a true apples-to-apples comparison, said Zane Carmean, director of quantitative research at market data firm PitchBook.

And there is no uniform way that researchers measure private funds’ performance.

They may calculate what are called “public market equivalent” (PME) returns — but there are different ways to measure those, each with their pros and cons, Carmean said.

Another metric used is the “internal rate of return” (IRR). But in a recent article, Jack Shannon, Morningstar’s principal of equity strategies, warned these are “not the compounded, annualized returns everyday investors are used to, so they should be skeptical of any marketing materials that compare IRRs with the annualized return of a public benchmark.”

So, when asked if private markets have outperformed public ones, you often may get a yes from those who favor giving retail investors access to alternative investments.

“Our updated analysis finds that private equity and credit funds continue to generate high returns and offer significant portfolio diversification opportunities,” the Committee for Capital Markets Regulation, a financial policy research group, said in a report last month.

The committee’s report cites many studies suggesting outperformance relative to public equity indexes over time. One found that if private equity buyout funds had accounted for 20% of the equity portion of a traditional balanced 60-40 portfolio between 1995 and 2017, it would have reduced the portfolio’s risk — and it would have increased average annual returns by about three-quarters of a percentage point, after accounting for the higher fees normally charged by private investments.

But other researchers and retirement experts may say private markets have not outperformed public ones.

For instance, a recent study by Ludovic Phalippou — professor of financial economics at Oxford University’s Said Business School and author of the book “Private Equity Laid Bare” — concluded that private equity funds returned “about the same as” public equity indexes since at least 2006.

“There is no clear outperformance in the US. There is in Europe, but it seems driven by (a) different industry mix,” Phalippou said in an email to CNN.

Meanwhile, a 2022 study by the Center for Retirement Research at Boston University focused on returns for public pension plans that invest in a mix of public and alternative private assets, like private equity and real estate. It concluded that “from 2001-2022, alternatives have not helped overall returns although they may have reduced volatility.”

Another critical comparison will need to be made for 401(k) plans

Beyond the public benchmark comparisons, 401(k) plan sponsors should consider whether the private options that will be pitched to them are likely to perform as well as traditional private funds.

To better fit the needs of 401(k) participants, the new products will have to be structured differently than a traditional private investment fund. Traditional funds typically have very high fees, very little transparency and only call for investors to put their money in when the managers have secured a deal to invest in; and traditional funds often require investors to keep their money in the fund until it offloads given assets after a number of years.

By contrast, an investment product with private asset exposure designed for workplace retirement plans may have somewhat lower costs and let investors put money in regularly as well as make periodic withdrawals during the year. But the product may limit how many redemptions investors can make to ensure liquidity demands can be met.

What’s more, the money invested on a regular basis by a 401(k) participant might not be put to work until the fund manager finds the next deal to invest in. That means they could see a somewhat lower return over time if their money spends a lot of time held in cash or cash-equivalent assets before being deployed.

“The returns are based off the timing of the inflows and outflows of cash into the fund,” Shannon, the Morningstar analyst, said in an interview about private assets.

Even if a new product charges investors less than what they would have to pay in a traditional private fund, they still will pay more than what they’d be charged in index funds, some of which can cost as little as $3 to $10 a year for every $10,000 invested.

“The new products being designed for 401(k)s and wealth platforms add yet another layer of costs (distribution fees, liquidity management fees, platform charges) on top of the already high fee structure of traditional PE funds,” Phalippou said.

Bottom line: “It is certainly possible that some of these new products may beat a traditional, public-market equity fund. But they’re going to need to clear significant fee hurdles to do so, as these funds are much costlier than the average (exchange-traded fund) investors are used to,” Shannon said.

Then again, he also expects a number of new products will offer “hybrid portfolios that mix both public and private assets.”

“We are seeing a lot of development in this space, particularly with collective investment trusts, which is a good thing, as CITs often require daily liquidity, and having too much private exposure in a daily liquid vehicle would be a recipe for disaster,” Shannon said.

Source: cnn

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Commodity

Gold and the U.S. Treasury market are both signaling the world’s growing unease with the trump administration’s economic policies, and a full-blown financial crisis will likely occur before a policy pivot, according to Desmond Lachman, Senior Fellow at the American Enterprise Institute.

“In the same way as canaries are used to give an early warning sign that something is fundamentally wrong in a coal mine, so too the meteoric rise in the gold price since the start of the Trump administration could be signaling that real trouble lies ahead in the dollar and bond markets,” wrote Lachman, who previously served as a managing director at Salomon Smith Barney and deputy director of the International Monetary Fund’s (IMF) Policy Development and Review Department.

“The Trump administration would do well to heed those warnings and make an early policy course correction to regain market confidence," he added. "If not, we should brace ourselves for real financial market turbulence in the run-up to next year’s mid-term election.”

Lachman characterized gold’s price rally in 2025 as “nothing short of spectacular,” noting that the yellow metal has outperformed all other major financial assets. “[S]o much for Keynes dismissing gold as a barbarous relic,” he said. “Indeed, since the US abandoned buying gold at $35 an ounce in 1971, gold has increased more than a hundred-fold or at an annualized rate of around 9.5 percent.”

“A primary reason for the gold price spike is fear that the United States will try to inflate its way from under its public debt mountain,” Lachman wrote. “It would seem that this fear is well-based. Trump’s recently enacted Big Beautiful Bill of tax cuts has put the country’s public finances on a clearly unsustainable path. According to the Congressional Budget Office, that bill will keep the budget deficit at over 6.5 percent for as far as the eye can see. In turn, that will cause the public debt to rise to a Greek-like 128 percent of GDP by 2034.”

Another reason many now believe the current administration will attempt to “inflate away the public debt” is Trump’s ongoing attacks on the independence of the Federal Reserve. “At a time when inflation remains above the Fed’s two percent inflation target and when Trump’s import tariffs are expected to add to inflation, Trump is exerting considerable pressure on Fed Chair Jerome Powell to cut interest rates by two to three percentage points,” he noted. “Trump is also making every effort to stack the Fed Board with monetary policy doves and to appoint a replacement for Powell who will do his bidding to aggressively lower interest rates.”

The ongoing trend of central banks moving away from the U.S. dollar and toward gold in their reserves is another significant factor behind gold’s recent gains.

“They seem to be doing so because of their growing mistrust of the United States as a reliable financial partner,” Lachman said. “Over the past few years, the US has weaponized the dollar in its conflict with countries like Iran and Russia, raising fears that this practice might be used against other countries. Similarly, central banks appear to be unsettled by Trump’s arbitrary imposition of punitive tariffs on friends and foes alike, as well as by his seeming disregard for the rule of law.”

He also pointed out that gold is not the only financial asset sounding the alarm that the United States’ economic policy may be “out of kilter.”

“Since the start of the year, the dollar has lost around 10 percent in value at a time when one would have thought that it would be boosted by the highest import tariffs in one hundred years and by the widening of the short-term interest rate differential in favor of the United States,” Lachman said. “Equally troubling is the bond market seeming to have lost its safe-haven status. No longer do investors seem to be flocking to the US Treasury market at times of market turbulence.”

“Rudi Dornbusch, the late MIT economist, observed that financial crises take a lot longer to occur than you would have thought possible,” he said. “However, when they do occur, they do so at a very much faster speed than you would have anticipated.”

“With clear early warning signs that investors are losing confidence in the US economy coming from the gold and dollar markets, the Trump administration would be well advised to reconsider its economic approach,” Lachman concluded. “However, I do not suggest betting the farm on that before a real financial market crisis occurs.”

After seeing extreme volatility following this morning’s hotter-than-expected CPI report, spot gold has since stabilized into a steady upward climb back toward even on the session.

Gold is the ‘canary in the coal mine’ as Trump policies risk ‘a real financial market crisis’ – AEI’s Lachman_1

Spot gold last traded at $3,636.79 per ounce for a loss of 0.10% on the daily chart.

Source: kitco

Risk Warnings and Disclaimers

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Devin

Russia-Ukraine Conflict

The US will urge its allies in the Group of Seven to impose tariffs as high as 100% on China and India for their purchases of Russian oil to pressure President Vladimir Putin to end his war in Ukraine.

The US will also tell the G-7 countries they should create a legal pathway to seize immobilized sovereign Russian assets and consider seizing or using the principle of those assets to fund Ukraine’s defense, according to a US proposal seen by Bloomberg.

The vast majority of the about $300 billion of Moscow’s immobilized assets are in Europe. Separately, senior US officials have floated with European counterparts the idea of gradually seizing those frozen Russia assets to increase the pressure on Moscow to enter into negotiations.

US President Donald Trump said that his patience with Putin was “running out fast” and mentioned in a Fox News interview that sanctions could also be targeted at banks. Canada, which holds the presidency of the G-7, convened a meeting of the group’s finance ministers to discuss proposals.

Trump has told European officials he’s willing to impose sweeping new tariffs on India and China to push Putin to the negotiating table with Ukraine — but only if the European Union does so as well. Several nations in the EU, including Hungary, have blocked more stringent sanctions targeting Russia’s energy sector. — Zoltan Simon

Russia and Belarus began joint military drills, with Europe watching on anxiously days after an unprecedented drone incursion into NATO territory in Poland. While Trump suggested that the drone incident “could have been a mistake,’’ Polish Prime Minister Donald Tusk essentially called that wishful thinking.

Giorgio Armani’s will directs his heirs to sell an initial stake of 15% in Giorgio Armani SpA to one of three preferred buyers — LVMH Moet Hennessy Louis Vuitton SE, EssilorLuxottica SA or L’Oréal SA — or a company of similar standing within 18 months, according to documents obtained by Bloomberg. That would eventually fold the Italian brand into a larger group after its founder died earlier this month aged 91.

Denmark is picking European defense companies for its largest-ever order of military equipment amid a tense relationship with the US. The government in Copenhagen agreed with opposition parties to order missiles worth 58 billion kroner ($9.1 billion), saying it will choose between systems produced by companies in France, Italy, Norway and Germany.

Fitch Ratings is scheduled to update France’s sovereign credit after a turbulent week in French politics, with investors bracing for a potential downgrade. Former defense minister Sebastien Lecornu took over as France’s prime minister after his predecessor was ousted in a confidence vote, pledging to engage opposition parties in reining in the country’s massive debt burden.

Turkish stocks are on track for their longest weekly losing streak since February, with investors on edge ahead of yet another court battle over the leadership of the country’s main opposition party. The case, scheduled to be heard in Ankara on Monday, is a reminder of the political risks affecting Turkish assets.

Dubai-based developer Binghatti is said to have started preparations for a potential initial public offering, as it seeks to capitalize on the multi-year real estate boom sweeping the emirate. Binghatti is building what’s planned to be one of the world’s tallest residential towers and has announced a Mercedes-branded tower.

Norway’s former Prime Minister Erna Solberg will resign as the head of opposition Conservatives after the party’s worst outcome in general elections in 16 years. Solberg, 64, will step down at a party convention in February. She spent more than two decades at the helm of the Conservatives, including an eight-year stint as premier.

Source: Bloomberg Europe

Risk Warnings and Disclaimers

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Adam

Economic

A surge in U.S. Treasury bill issuance in recent months has reduced liquidity in the financial sector, stoking investor concerns that funding markets could face a September squeeze.

That could create ripple effects through markets by reducing demand for assets like stocks and corporate bonds, and pushing some investors to set cash on the side in anticipation of volatility.

Some say there is a mild risk of a repeat of 2019 when a liquidity shortage caused a spike in short-term borrowing rates until the Federal Reserve intervened in overnight markets to alleviate the crunch.

"There is some concern that we could have a repeat of September 2019 at quarter-end due to technicals, corporate tax days, and coupon settlements," said Teresa Ho, head of short duration strategy at J.P. Morgan in New York.

In September 2019, overnight funding costs in the repurchase (repo) market spiked due to a large drop in bank reserves amid large corporate tax payments and payments for Treasury debt, forcing the Fed to inject liquidity in repo markets.

Some measures of liquidity are already signaling stress ahead, such as a higher cost of borrowing cash overnight collateralized by Treasuries. Still, money market conditions are different. The Fed has launched the Standing Repo Facility (SRF) -- that could be tapped by banks for emergency liquidity, and bank reserves - the biggest component of overall financial sector liquidity - are much higher at $3.2 trillion than in 2019.

However, the Fed has been shrinking its bond holdings for over three years, drawing attention to liquidity. At the same time, rapid issuance of Treasury bills by the government after the debt ceiling was raised in July, has prompted traders to anticipate potential stress.

Pressure could increase around the September 15 corporate income tax date and the end of the September quarter, when traders say banks tend to reduce intermediation activity.

"September tends to be one of the more volatile months and so we are really keeping a close eye on repo and front-end funding spreads," said Clayton Triick, head of portfolio management of public strategies at Angel Oak Capital Advisors.

Triick is keeping money on the side in case money market volatility leads to wider credit spreads, which he said would be an opportunity to buy more corporate bonds.

SEPTEMBER STRESS

Generally, an increase in government borrowing coincides with a decline in demand for the Fed's overnight reverse repo facility (RRP), through which money funds lend to the central banks, or with a drop in bank reserves parked at the Fed.

These two money pools are monitored by the Fed to assess financial sector liquidity as it continues shrinking its balance sheet through quantitative tightening.

"We expect U.S. bank reserves to continue seeing drawdowns in the upcoming months as T-bill net supply increases," Citi analysts said in a recent note, which could lead to a potential liquidity crunch this month.

Among the measures of liquidity signaling stress is that the Secured Overnight Financing Rate (SOFR), the cost of borrowing cash overnight collateralized by Treasuries, rose to 4.42% last Friday, the highest in two months, signaling pressure in a key funding market for Wall Street. On Thursday, SOFR pulled back a bit to 4.39%.

Meanwhile, the spread between one-month forwards of SOFR and the effective fed funds rate, at which banks lend overnight unsecured loans to each other, stood at minus 7.5 basis points (bps) on Thursday, the most negative level on record.

This means that the forwards market expects SOFR to trade 7.5 bps higher than fed funds by end-September, suggesting tighter repo funding conditions. SOFR typically tends to be lower than fed funds by five to 10 bps because the former carries minimal credit risk being secured by Treasuries.

Nafis Smith, head of taxable money markets at Vanguard, said while repo spreads are experiencing mild and periodic pressure, these are typically short-lived, in contrast to 2019 when they were persistently elevated leading up to the September dislocation.

He added that worries about a 2019-style funding disruption appear "overly pessimistic."

DECLINING BANK RESERVES

Usage of the Fed's RRP facility has also fallen sharply, from a peak of $2.6 trillion at the end of 2022 to $29 billion on Thursday, leaving bank reserves as the main source of financial sector liquidity.

Lou Crandall, chief economist at Wrightson ICAP, said he expects more funding pressure this quarter compared with end-June because of declining bank reserves, which could necessitate higher usage of the Fed's SRF. Fed data showed that banks borrowed $11.1 billion from the SRF last June 30 backed mostly by Treasuries, the largest borrowing since its launch four years ago.

Crandall said he expects SRF borrowings as high as $50 billion at end-September.

He added that bank reserves could well dip below $3 trillion by end-September as market participants settle a substantial amount of Treasury debt and pay corporate taxes ahead of a September 15 deadline.

To be sure, some market players argued that any funding squeeze would be fleeting. Since quarter-end liquidity tightness is expected, the odds of investors being blindsided are slim.

"It never seems like funding markets blow out when risks are well-telegraphed," said Jonathan Cohn, head of U.S. rates desk strategy at Nomura.

"The market pre-positions, precautionary liquidity is sourced, so you can have these known periods of pressure like a reporting date, that come and go, that don't require any direct Fed intervention."