Late Day Treasury Bid

Big Earnings Week

There was a curious late day treasury bid today and this rally is continuing into the Asian session. Here is the latest data:

With a decent steepening bid to the market the only data that we see causing this is the continued deterioration of the banking sector as First Republic came out late in the day and it exposed the fact that its deposit base plunged 41% in the first 3 months of the year! As we told you in prior letters, when banks lose deposits, they must shed assets or utilize emergency funding like the BTFP program which was why it was created actually, so that banks do not have to realize the loses right away, they can pledge those assets to the BTFP, not for marked to market of course, but 100 cents on the dollar plus a vig…