Something changed in this market this week. Everyone's trying to figure out why. The Fed has been buying roughly $40 billion a month in Treasury bills since December to front-load the liquidity drain that comes every year around tax season. Banks need to be liquid when all that cash goes out the door. The Treasury is issuing debt to meet its obligations. The Fed buys it so the banks don't have to. As we got closer to tax day, the Treasury likely reviewed its numbers and realized it had excess cash. That excess doesn't just sit there. It finds its way back into the system. The Treasury General Account started drawing down the week of April 1st. About $100 billion. The Fed also announced it's keeping $25 billion of those monthly purchases going forward. Look at the balance sheet. It's growing. That's money printing. Now think about where that excess probably ends up in this environment. Oil is volatile. Foreign markets are a mess. Geopolitics aren't improving. The money goes to the cleanest shirt in the dirty laundry, which is the U.S. market. And it likely flows straight into the most beaten-down, highest-beta names that had been getting destroyed for weeks. The FNGD's four-month uptrend imploded about 10 days ago, right around the time this excess would have begun to move. This explains the violent move over the last few days. It doesn't explain where we go from here. At some point the sugar high ends, and we have to be careful.
Published Apr 16, 2026Updated Apr 16, 20264 min read
Something changed in this market this week. Everyone's trying to figure out why. The Fed has been buying roughly $40 billion a month in Treasury bills since December to front-load the liquidity drain that comes every year around tax season. Banks need to be liquid when all that cash goes out the door. The Treasury is issuing debt to meet its obligations. The Fed buys it so the banks don't have to. As we got closer to tax day, the Treasury likely reviewed its numbers and realized it had excess cash. That excess doesn't just sit there. It finds its way back into the system. The Treasury General Account started drawing down the week of April 1st. About $100 billion. The Fed also announced it's keeping $25 billion of those monthly purchases going forward. Look at the balance sheet. It's growing. That's money printing. Now think about where that excess probably ends up in this environment. Oil is volatile. Foreign markets are a mess. Geopolitics aren't improving. The money goes to the cleanest shirt in the dirty laundry, which is the U.S. market. And it likely flows straight into the most beaten-down, highest-beta names that had been getting destroyed for weeks. The FNGD's four-month uptrend imploded about 10 days ago, right around the time this excess would have begun to move. This explains the violent move over the last few days. It doesn't explain where we go from here. At some point the sugar high ends, and we have to be careful.
