Raoul Pal’s Liquidity Roadmap Post-US Government Shutdown
- The US government has reopened, with Treasury General Account (TGA) spending expected to significantly add liquidity for several months.
- Quantitative tightening (QT) will end on December 1, shifting the Federal Reserve’s focus from balance-sheet reduction to reinvestment of maturing Treasuries.
- Raoul Pal anticipates temporary measures like Term Funding and Standing Repo Facility (SRF) operations to prevent a year-end funding squeeze.
- Potential changes to the Supplementary Leverage Ratio (SLR) could allow banks to absorb more issuance and re-lever balance sheets, lowering rates as banks buy more bonds.
- The Digital Asset Market Clarity Act of 2025 is moving through legislation, potentially clarifying oversight for digital assets between the CFTC and SEC.
The reopening of the US government and ending of QT are expected to increase liquidity in the market, which Raoul Pal argues is beneficial for risk assets like crypto. The potential easing of SLR regulations could further enhance liquidity by allowing banks more capacity to buy bonds.
These developments suggest a favorable environment for digital assets amid increased market liquidity and regulatory clarity efforts in the US crypto sector. (Source)
