Another week, another round of volatility that left even the most risk-tolerant corners of global markets looking shaky. Stocks have wobbled. Bitcoin was hammered. Repo markets flashed stress. SOFR jumped above the Fed’s supposed ceilings. WTI briefly slipped into contango. And the Fed’s own open-market desk all but admitted that we are “probably not that far” from the next round of balance-sheet expansion — a message echoed almost verbatim by New York Fed President John Williams.
When you add it all up, it paints a picture of a financial system that is no longer operating cleanly. The tension that has been accumulating quietly in the plumbing for months — maybe years — is now beginning to spill into asset prices. This is not about one market or one indicator. It’s the same story replaying across assets: collateral scarcity, deteriorating macro conditions, and a Fed that is trying to project confidence while quietly checking the brakes.
In other words: the liquidity illusion is wearing thin.
Let’s unpack what actually happened this week — and why the underlying dynamics matter far more than any single headline.
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