The tables have turned in equities, at least temporarily, with Nvidia selling off, while the rest of the market is being bid up.

The simple explanation may be that liquidity took a short-term beating in Mid-June, which may be spilling-over to the most liquidity sensitive assets such as Tech and Bitcoin, but the trend is fairly benign from here, and we expect liquidity to stay clear of the “hiccup-zone” a few hundred billions below current levels.

The counterargument (to our benign liquidity view) is that MM funds may decide to keep the ON RRP facility usage elevated to send a signal to the Fed that the facility is still needed, which is certainly a possible scenario and one we will be able to test already during July when the net bills issuance will be ramped op again.

The Bitcoin sell-off has likely also played a part in stressing the Technology bet overall, and it seems like the “Mt. Gox panic” is close to hitting a peak.

Chart 1: Liquidity to improve on a trend basis over summer