While everyone was lost in the drama of Washington’s latest shutdown soap opera, the Fed quietly slipped $125 billion into the repo market — like a magician pulling cash from a hat, only this time the trick drained straight out of the Reverse Repo rabbit hole.

The widening SOFR–Fed Funds spread is flashing red, screaming “liquidity crisis,” but the problem runs deeper—the system’s spring is coiling tight again. With bank reserves at a four-year low of $2.8 trillion, the Fed’s back in the repo game, quietly swapping Treasuries for cash so banks can offload debt without calling it a bailout.

The public must trust the banks, and the banks must trust that the Fed will catch them when they fall. In 2025, a few small banks quietly vanished—small enough not to spook the herd. The Fed fears panic more than inflation; Powell knows price control is gone, but fear control isn’t—yet. The cycle can’t be stopped. As 2032 nears, expect tighter rules, frozen credit, and the final act: when banks stop trusting the Fed, and people stop trusting banks.

While the bond market was taking a well-deserved nap for Veterans Day and Washington was still performing its never-ending shutdown soap opera, the Treasury decided to sneak in a casual $42 billion 10-year auction—because what’s a little more debt between friends? The notes priced at 4.074%, slightly down from last month’s 4.117%, marking the second-lowest yield since October and, for extra drama, managed to tail the When-Issued by a whopping 0.6 bps. Nothing says fiscal discipline like celebrating veterans by selling more IOUs.

The bid-to-cover ratio limped in at 2.433, down from 2.478 and the second-lowest since August 2024—apparently, enthusiasm for lending to Uncle Sam is fading faster than a campaign promise. The internals weren’t much better: Indirects grabbed 67.0%, barely up from 66.8% but still shy of the 70.2% recent average. Directs took 22.55%, leaving Dealers stuck with 10.5%—their biggest slice since August and probably not the kind of “market share” they were hoping for.

In a nutshell, the tailing 10-year auction was yet another reminder that the “risk-free” U.S. Treasury is now the riskiest fruit in the bunch. As America leans deeper into banana republic territory, investors are waking up to the uncomfortable truth: the only safe portfolio left is the banana republic special — stocks for the show, and gold for survival.

On November 12, Congress finally ended the longest government shutdown in U.S. history—just in time to save Thanksgiving from turning into a national budgeting seminar. The deal funds key agencies like Veterans Affairs, Agriculture, and the FDA through 2026, while everyone else gets a short extension until January 30. Translation: they’ve kicked the can down the road... again.
Republicans won’t touch Obamacare subsidies, Democrats are trying to save face, and both sides clearly wanted to clock out for the holidays. The good news? Federal workers can relax, planes will still fly, and America can pretend everything’s fine through New Year’s. But let’s be real—Congress shouldn’t get paid for doing nothing. Their endless gridlock keeps adding billions to the national debt. At this rate, the only thing truly bipartisan in Washington is the art of procrastination… and maybe the quiet, creeping sense that the Union’s patience is running out.


https://x.com/WhiteHouse/status/1988821582802804866

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As the Washington shutdown circus finally folded its tent—at least until January—the US Treasury decided it was time to pass the hat around again, auctioning $25BN in 30-year bonds. The sale ended with a high yield of 4.694%, a tiny dip from last month’s 4.734%, but still managed to tail the When-Issued level of 4.684% by a full 1 basis point. That makes it the second tail in a row and the biggest since August, when the auction tripped over its own feet with a 2.1bps tail. Even the bond market seems exhausted by the political clown show.

The bid-to-cover limped in at 2.295, down from 2.382 and scraping the bottom of the barrel—its lowest since August’s 2.266. Remove that outlier and today’s number would be the worst since 2023. The internals tried their best to look respectable: Indirects stepped up with a 71% take, their strongest showing since October 2024. But Directs clearly didn’t get the memo, plunging to 14.5% from 26.9%—their weakest since, well, also October 2024. Dealers, as usual, were the unlucky ones left holding 14.5%, their heaviest load since August. In short: everyone showed up, just not in the right proportions.

Overall, it was yet another subpar, tailing auction—proof that more investors are waking up to the fact that the “risk-free asset” now comes with a side of risk. With the US increasingly behaving like those nations run by “Educated-Yet-Idiots,” Treasuries are starting to feel a bit… Banana Republic-flavored.

China’s October data softened a bit, but not enough for Beijing to open the stimulus floodgates. As Master Kong might say: “When holidays distort the numbers, wise officials do not panic.” Much of the slowdown was simply factories front-loading orders in September, and average output still beat August levels. With GDP already solid and a little tariff relief in the air, China needs only a modest 4.5% in Q4 to hit its 5% target—an easy hurdle for an economy that has seen bigger dragons than this. Policymakers will likely keep their powder dry, focusing on long-term plans for 2026–2030 while saving a few policy arrows for early next year.
Industrial output cooled to 4.9%, retail sales stayed sluggish at 2.9%, and investment continued its Confucian lesson in humility—falling for a fifth straight month. Yet month-on-month, activity still shows signs of life. As Confucius might quip: “A slowing ox still moves forward… just not as fast as the cart driver wishes.”

China still faces headwinds at home and abroad. Even after a trade-war pause, October’s export slump shows that global demand remains as fickle as a Confucian student before exams. Singles Day may perk up November, but there’s no sign of a true consumer revival. Policymakers, ever mindful that “the wise mend the roof before the rain,” are using the rest of 2025 to prepare for 2026 — no more easing for now, with modest rate and RRR cuts saved for next year. Instead, Beijing will keep working on its local-government debt puzzle and likely front-load some 2026 special bond quotas early next year.

In a nutshell, China’s economy is slowing but still steady enough that Beijing, like a patient Confucian sage, is saving its stimulus tools for 2026 rather than rushing to fix what merely needs a gentle nudge, not a rescue.

The Macro Butler pulled up another armchair for a lively exchange with Piggo’s Trading Desk , noting — in true Confucian fashion — that while China steadies itself after deflation and prepares to lead the next decade, the West, guided by its legion of ‘Educated Yet Idiots’, continues to scatter wealth like a careless court official with holes in his purse.

https://themacrobutler.substack.com/p/interview-with-piggos-trading-desk-ad1

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The Macro Butler spent afternoon tea with Hongbin Jeong of Money FM 89.3 Singapore—spilling Earl Grey and market secrets—while breaking down the investment boom powering America’s new electric grid and how investors can plug in for profit.

https://themacrobutler.substack.com/p/interview-with-money-fm-893-singapore-70b

The Western “Educated Yet Idiots” are so desperate to plug the holes in their overspent budgets that they always want to tax anything that glitters.

Case in point: Italy’s brilliant new idea—a one-off levy forcing households to declare off-the-books gold, hoping to squeeze out over €2 billion. Pay 12.5% to “certify” your bullion, heirloom jewelry, or old coins by June 2026, or risk a 26% tax later. Unsurprisingly, people have been avoiding the official market like the plague, pushing sales underground. With an estimated 4,500–5,000 tons of privately held gold—worth about €500 billion—the government clearly knows exactly where the treasure is… and wants a piece of it.

https://www.reuters.com/business/italy-weighs-one-off-levy-bring-private-gold-holdings-into-formal-economy-2025-11-14/