Happy Sunday, folks—if you can stay upbeat in the current market environment, that is.

We have had September 100% spot on, and the developments late on Friday support our notion that a dash for USD cash will arrive through the month. The USD started rebounding alongside the sell-off in commodities and risk assets, following Waller’s appearance during the FOMC Q&A. Despite talk of frontloading rate cuts, it seemed to puncture the possibility of a 50bp cut and the end of QT as soon as September.

We are still staring directly at the mid-month corporate and non-withheld personal tax deadlines, coupled with the typical window dressing from banks ahead of quarter-end. This means that over $400bn will be removed from the financial system between now and the end of the month.

This is likely to make the USD more expensive in money markets and cross-currency swaps, leading to a continued sour environment for commodities and risk assets throughout the month.

Chart 1: Liquidity will shrink through September