This Is The Most Underappreciated Liquidity Boom In Years w/ Andreas Steno Larsen

Summary

Andreas Steno Larsen discusses how the supplementary leverage ratio (SLR) reform implemented April 1 allows banks to run more leverage, expanding repo market activity and creating a stealth liquidity boom. He believes this mechanism, combined with Treasury General Account drawdowns from lower tariff intake, will keep pushing risk assets higher, and sentiment is not yet euphoric. The episode emphasizes the underappreciated role of repo transactions in fueling market rallies.

• SLR reform implemented April 1 allows banks to increase leverage, boosting repo market capacity.
• Repo activity has increased by $250 billion since April, with potential for $1 trillion more.
• Treasury General Account drawdown due to lower tariff intake adds fresh liquidity until end June.
• Andreas views the liquidity amplification from repos as a key driver for risk assets.
• He believes the current rally has further to run and sentiment is not yet euphoric.
• The episode highlights the shift from Fed-driven liquidity to bank-driven liquidity through repos.