YouSaid · the spoken record

John Comiskey

lines on the record: 98
first: 2024-01-29
most recent: 2024-01-29
sittings or episodes: 1
sources: podcast

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“Yeah, so in 2020, the crisis to fund the war level amounts of fiscal stimulus from Congress, the Treasury loaded up like 1.7 trillion dollars. You're saying that's not a normal phenomenon. And now they want to keep it. So what is the band of the lower limit for the Treasury General Account and to the upper limit?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“But of course, they're paying interest because they have to pay interest on whatever debt that they issued in order to build up the TGA, right? Yes.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Heads gross debt redemption. So they kind of assume that they have to pay, they have to redeem the debt, but that the debt market.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“To a degree, I'm conjecturing here because I don't actually work at Treasury. But first and foremost, Treasury has to pay the bills. They have to meet the obligations as they come due. I think related to that is they have to risk manage their bank account, right? In the same way that we at home, we keep a certain level of money in our bank account to meet unexpected expenses that might come up and happen. The treasurer does the same with respect to the respect to maintaining the level of the TGA. Of course, in the middle of debt ceiling impasses, that goes out the window because they don't really have any other choice and they're just trying to get by on funes until Congress finally suspends or ups the debt limit. But generally speaking, the treasury is aiming to keep the TGA no lower than a week ahead.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Are treasury's goals right now? And if it's January 24th, 2025 and Secretary Yellen is sitting with her team at Treasury and they're saying, oh, wow, we did a great job last year. What metrics are they looking for? I mean, are they running it like a corporation where, okay, we have the yields curve inverted, we want to issue a lot of longer term debt to lock in that money. Obviously, and if you think rates are going to go up, that's even better. If you think rates are going to go down, maybe you finance more shorter term. Obviously, it's hard to know, but from reading their reports extensively, they must express a preference for this, a preference for that. What are they trying to maximize optimize for and what are they trying to avoid?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Or not observed to absorb, which would be coupons. All else equals should lead to less risk appetite from the general public for other assets and less risk appetite for other assets is going to probably translate to lower prices, right? It should, I guess, is the theory goes.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, if you increase the supply of something, then price of it should go down, right? Which for bonds, of course, means yields go up and vice versa. So I would think that that would be the effects. I mean, occasionally, and then, you know, and look, I'm an avid reader of folks who are way more informed and have way more experience in terms of actually tying it to the market and the market effects. I mean, folk, like the Andy Constance of the world do a phenomenal job on kind of projecting that sort of thing. I try to apply the general principles and then try to take the analysis of smart folks who have been doing it for a lot longer than me and then go from that. But yeah, I mean, the essence being that the more duration that the market is forced to observe, which”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So you tried to follow the breadcrumbs and create this model to understand the financial system and for investing in bonds and stocks and the market. How do you tie this to the market? I mean, when there are more long-term bonds in the market, demand is the same, presumably the yield are a little bit higher, the price is a little bit lower. How do you get from where your model is to kind of market analysis?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Stops as tax inputs, but there's a lot of the individual underlying flows. But once you start to model it at that level, which is really, I think, to me, that's the value of the approach, right? Because mistakes that get made and project like errors that get rephrase that, errors that happen as a part of the projection, if you project at all these lower underlying levels, well, then you get this like Fermi effect where they start to cancel out some. And when you get to the top line number, what is the TGA level? You actually can start to get fairly accurate. So you try to get each individual flow correct and then knowing that you won't, but then you put them all into the mix and you can get a lot more accurate than you think that you can, I guess. Or at least I thought that I would be able to do.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, without even tackling kind of broad questions like that, like what is the point at which you can't sustain it or the system can't sustain it? And just trying to project out where we're going to precisely be nine months from now is hard. There's a lot of underlying flows that have to be modeled and they have to be modeled correct. And like if you follow along when I folks follow along when I post the results comparing my model to what the actuals came in on the daily treasury statements, I mean, it does pretty well, but there's always, there's usually some sort of variance, sometimes significantly, like just today, the mailed in estimated tax receipts didn't come in quite as heavy as my model was projecting. But that might make itself up tomorrow. I mean, eventually that dies off when we get to the end of January, that flow largely.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I mean, I'm just starting to think, I mean, this stuff is really complicated and it's very hard to understand and describe because it's, you know, I mean, the Navy needs a new ship. Here's a certain amount of money. Okay. Healthcare. Here's a new ship. Here's the money. I mean, you're, you know, every one of those things is an Excel cell in your Excel spreadsheet. And so it just strikes me how difficult it is for people to like forecast the future of the monetary system about whether massive fiscal deficits and debt expansion is there a limit. Who knows if, you know, if people, you know, don't even know what's going on on the day-to-day basis. I mean, it's just so hard to forecast. That's just a thought I have.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, of course, I didn't do that with coupons. They did that with bills. But yeah, I'm in the floodgates were absolutely open back then.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“No, I mean, it's certainly larger than it was like a year, year and a half ago. But then prior to the flood of taxes that came in in 2022, which pushed down the need for Treasury to issue as much, I think they were doing comparable amount of raw coupons back in that time period. comparable in any event may not have been quite this much might have been a little more but it was in the ballpark”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, but there's a little bit of calendar effect quirkiness that goes on there, right? Like technically they're going to settle the end of month March issuance that that'll settle on 4.1. Of course, the flip side to that is that the end of month June won't hit until early July. But at the end of June, you've got the tips and FRNs that issue at that point in time. So there's a little bit of calendar effect quirkiness, but directionally, yeah, over a trillion in issued coupons. That won't be the net, right? The net of that trillion minus the coupons that are maturing during that time period, my model projects it to be 560 in the net, about 580 that are maturing over that time. And that is publicly held bills that are maturing.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So, issue raw or issue net. Q2. So, yeah, if you add up all of the coupons in Q2, it's actually 1144 would be the total coupons that would be issued in Q2. And of course,”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Well, so I do my projection in the old format, which I'm not entirely sure that Treasury is going to continue in this next QRA. But the old format gave you the net coupons that will be out in Q2, right? Or that they provisionally project. And then as well, it would tell you what the net new bills were. And so for the last couple of QRAs, the net new bills has been huge, right? You know, 500 billion, I think it was like 850 billion, the one the quarter prior to that. And for next quarter, Q2, not Q1, right? But for Q2, that number is, I think, negative 293 billion is what my model projects will be the actual bill. Net bill issuance over the quarter, which means that's negative. They're going to redeem more bills than they issue in the calendar quarter of Q2.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Capture all of that. Like, it's almost like hyper seasonality, right? It's like day level flow seasonality, both across the spending patterns and across the debt issuance and the maturity, the maturity of debt and the corresponding flows that go with it.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, for the most part, it is taxes. Although you have to be careful in terms of calendar effects because when the QRA comes out and it does a financing estimate that assumes an end of quarter level, that end of quarter level is a calendar specific date. And if that end of quarter happens on a settlement date, then you're going to have like debt flows on that settlement date, you know, both redemptions and issuance, whatever it is for that particular date that hit on the end of quarter and will affect what the end of quarter TGA balance is. Whereas if the quarter ends like it will in Q2 in June or on June 28th or 29th, I forget, but it's not the end of the month. So the end of the month, the settlement of the end of the month, June maturities will not be reflected in the TGA. So you have to be a little bit, you have to be a little bit careful. But again, that kind of goes towards what's the approach that I'm trying to do. I'm trying to.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Of the mechanics they only need so much money they don't want to have the TGA run significantly higher than it needs to and the flows in April and then May and also June dictate that they just won't need as much money because of the way that the flows come in which is which is to a degree calendar effects and and seasonality and that's what my model models out in daily level detail to try to get to try to get to answers there”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Actually, seen, right? So I project they'll increase in Q2 in line with what they're going to increase in Q1, which matches what they did in Q4. That may or may not turn out to be exactly correct, but it's probably not going to be off by too much. And I don't think that's particularly, I mean, I don't know, maybe it is controversial. But to me, the more interesting thing is that when you fix the coupon issuance that folks, I think folks have a mindset that well, the Treasury is issuing a lot of bills right now. And they are. In fact, they just increased the amount of bills that they're issuing this week and next. But that will stop. That will stop at the end of March and reverse not insignificantly in April.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Okay. And so something to bear in mind, right? The amount of coupons that They choose on the coupons and then bills make up the difference, if you will. So, but what do my models show? Well, first, let me address the coupon issuance, because I actually think this is kind of more or less controversial this time. I do think that they'll further increase the coupons in this QRA, primarily because they said they would. I mean, there was language in the TBACS report to the Secretary in the November QRA that said an additional quarter of increases of similar increases would likely. And I don't see any real macro need for that hasn't really shifted now versus then. So I guess, again, I'm making a call that they'll kind of do what they say or do what they intend or kind of alluded to doing and that they'll do increases in line with what we.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Well, so did everyone in the market apparently because on November 1st, when that was issued, it was pretty much the top in yields. And, you know, the 10 years moved something close to 100 basis points since then. Okay, so we're recording this on Wednesday, January 24th. I believe next week, what is that? February 1st. Is that when the quarterly refunding announcement is made? And so what is your expert? You run the models. What is your model say about how the treasury is going to fund itself going forward?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“November, and more so, and I thought this was also super interesting. So the TBAC recommended that they do less than I thought the TBAC would. And that's what actually comes out in the QA is the TBAC's recommended financing tables. But on top of that, Treasury further reduced by a billion for both November and then also December and January, the increase to the 10 and the 30. So at the longer tenors, Treasury kind of stepped in and knocked it down. Even below, even what the TBAC was recommending that they do. And so on the whole, it was a signal that we're a literal statement, we're not going to issue as much as people thought that we were. So long way of putting it, I thought they would issue more coupons than they ended up doing.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Financing need and to try to stay closer to the 15 to 20 percent range. And so they laid out these three scenarios in the August QRA and I chose to kind of split them down the middle between increased issuance at the shorter ends of the curve versus at increasing more of the longer tenors. was incorrect. Well, directionally I was incorrect in any event. They did not increase coupons as much as I thought they would by taking a blend of the three scenarios that they laid out. They increased them significantly less.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Would be worse if they had not upped the coupon issuance. But taking a step back even from there at a more basic level because the more and more debt we take on, well, we have to issue more and more debt. I mean, we've either got to do it through bills or we got to do it through coupons. It's got to go somewhere. The Treasury knows what's upcoming like what coupons are redeeming. say a 10-year note that they issued in 1994, they know when that's redeeming and they know what the rate that they have now is. And based on whatever that net is, they know kind of structurally based on the rate they have, what additional money will be coming in to fund deficit spending. But as they looked forward, they said, well, we need more coupons in order to meet the financial.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Had to, like the TGA got down into the double digits, super crazy low right before the debt ceiling impasse was resolved. And Treasury had started to refill kind of the, we'll call it the structural level of the TGA or the minimum level that they like to keep it at. They had started to do that refill back in really as soon as the debt ceiling was resolved and then continuing that through July. And they kept that process up all the way through early December actually was until this past week. They had done a series of increases to the amount of bills that they were issuing. I mean, they issued an enormous amount of bills in Q and the last half of last year. And as a result, that SKUs that push that bill rate significantly above the 20%.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So, one of those inputs is that historically Treasury has tried to keep it to 15 to 20 percent of total bills issuance. But that's not like a legal requirement or requirement by students, something of that nature, then their target ban for bill issuance for a while. Although historically, as they've said recently, I mean historically, I think that average is actually a little north of 20. It's like 22.5 or something like that. But the desire to stay within, to stay within that 15 to 20 percent band requires Treasury to required Treasury to increase coupons because if you recall back then, bills, the issuance of bills was significantly rising. Why? Because”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“What is causing that need like in a parallel universe, one where the Fed is issuing only one month bills and one in which the Federal Reserve is issuing only, I'm saying Fed, I meant Treasury. The Treasury is issuing only 30-year bonds. What are the different inputs about why the Treasury is issuing short-term versus long-term?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Composition of the issuance bills versus coupons over the next, I don't know, three, three, four quarters. And they went through a variety of scenarios because Treasury contemplated, and they largely have. They had increased their bond issuance significantly versus where it was prior to prior to this past August. But they anticipated the need to issue more coupons. And so they laid out.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Let me take a step back to the QA that happened prior to November in August, the last one, the one that actually did really up coupon issuance, which also kind of started a or was at the beginning of bonds not doing so well for the next couple of months. But in that August QRA, the T bag, the advisory committee to the Treasury Borrowing Advisory Committee, they had done, they kind of included materials. Like most of the QRAs, there's some charge, there's some little project that, or there's some project that the TBAC is doing and that gets presented during this QRA process. And this particular project was projecting coupon issuance and”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“It did, yeah. So when the treasury made their quarterly refunding announcement back in November, I had projected a week before-ish that they were going to significantly more substantially than they ended up doing up the amount of coupons that they would issue.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“You going into maybe, let's say, October, the bond market is melting down. Many people, myself included who like to think of themselves as following the Federal Reserve a lot or not paying a lot of attention at all, really, to what the Treasury is going to fund itself and issue itself. I believe on the first day of November it makes its announcement. What was that announcement and how did that compare to your expectations going in? Because it coincided with a pretty severe rally in bonds and stocks that is still ongoing.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Go to 10%. You're the people who bought the bonds are in a lot of pain, and you're feeling like a genius. Whereas if they go from zero to 10% and you issued it at one month bills, increase your interest expense rises exponentially as interest rates rise. So this point of duration is interest rate sensitivity is extremely important. And as you say, bills, the short-term stuff, I believe two years and in, you know, it's like you borrow $99, you pay back $100, no coupon, no dividend kind of, whereas the 10-year, yeah, you get that quarterly or maybe twice, twice a year coupon. So, okay, now take us to.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“And struck a deal and suspended the debt ceiling. So we didn't hit that. We didn't hit figuring out what was going to actually happen had we hit it.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Social Security Trust Fund and catch up payments and whatnot, which we can go into if you'd like. I can explain it, but the bottom line is that created essentially a $30 billion, $35 billion-ish obligation that Treasury couldn't pay that hit or that was going to hit in the first week of June. And the interesting thing about that, though, is that wasn't a cash flow issue at all. It was just a matter of they couldn't issue the debt to pay into the to pay into the trust fund because they were at the debt ceiling and they couldn't redeem, say, other publicly outstanding debt in order to keep it under the debt ceiling because they didn't have the cash to do it and thus, boom, you get the X date, which legit really would have been the first week of June, like the 6th and the 7th, ever get exactly what it is now. But of course, Congress came to their...”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Whatever that particular treasury bill auctioned at. But the point being that they pay interest by collecting less, but they collect less up front. And so in a sense, like in a cash flow basis, that hits immediately. And I wasn't accounting for it. And every Tuesday and Thursday, when they issue, when they issue treasury bills, this amounts to somewhere between one and a half billion to maybe as much as like four or five billion in lost income. And my model at the time was not taking that into account. And because I wasn't taking into account, I thought there was going to be more income than there actually was. And so that brought it forward. And then there was a really technical issue with the Social Security Trust Funds and the way that the Treasury pays in to the”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, they pay out 4% and they do that. They do that every six months until it matures and then you get back par, right? You get back what you initially put into it. And that's the way that's the way that they pay those interest on the coupons. But for bills, they don't do that. For bills, rather, what they do because they're so short dated is let's say that it's a 13-week treasury bill. And let's say that they're going to issue $50 billion par of this 13-week treasury bills. Then what they'll do is instead they'll collect, instead of collecting 50 billion from the folks that purchase these bills, instead they'll collect 49, 49 and a half billion or whatever it works out in order to get to an investment rate that matches whatever the”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Move into June. Rather, it was the easy to forget Bill Drop, right? And so what that is, is that's an aspect of the debt. So when the Treasury, when the Treasury issues Treasury bills, the way that they pay interest on Treasury bills is different than it is with coupons. Like with coupons, they issue the coupon. And then if it's the coupon, say it's a 10-year note and it's paying four percent, then every six months, I think it is, you get two bucks.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Big modeling effort initially was to try to model all of those spending flows, the withdrawal flows, and then as a result also model the tax flows and do it at a day-level granularity because the day levels, the days actually matter, right? Whether or not the x date was on June 3rd versus June 8th or June 9th, that sort of thing would potentially matter, right, depending on what type of an investor you are and whatnot. That might be valuable information. So I was trying to do it with a day level granularity. And the reality of it was it, I actually, the model did a fairly good job at actually projecting the withdrawal flows, the spending, and the tax flows, the daily flows. That didn't end up turning out to be the source of error that caused me to initially think it was going to be in late July and then have it.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“So I initially thought that it was going to be somewhere in late July. But, you know, applying an engineering analysis of it, it's like I'm trying to prove that. I'm trying to model what the system is in order to substantiate that conclusion. And then really, it's more model it and then let that make the conclusion for me instead of me trying to guess it based off of whatever it is that I think that I know, right? But no, I did not think it was going to be in early June because as it turned out, there was some material.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“And I'm remembering people were saying maybe I did an interview with in April and people were saying it would be June, but maybe July or maybe even August, September, October. And so what were you finding at the time?”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah, exactly. The treasury's checking account at the Fed, if you will. So it would have the X date would have been the date that the Treasury would have either not met an obligation, either didn't make a payment it was supposed to make or what have you, or they would have engaged in whatever they would have done, how, you know, if Congress had not actually reached an agreement to suspend the debt ceiling. But the X date was the day that it would have ran out of money, I guess, looking at it in a colloquial sense.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so the X date was, and there, you know, the definition, the precise definition of it, might be a little nebulous, but it would have been the day when the Treasury couldn't fully meet its obligations, I guess, is kind of a nice broad way of putting it. So does that mean the TGA is zero? Well, maybe, maybe not. Treasury General.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“That's working when the line's going up, but the Fed is saying that it should be going down. And it's just an understanding of the actual mechanics behind what it is. You can see there isn't actually a conspiracy going on the Fed is doing what they're saying that they're doing. They're not doing what people assume should be happening.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“With respect to the mortgage backed securities, it's going up because they hit the balance sheet when they settle. But the Fed, but they sometimes take three months to settle from when the Fed kind of commits to buying them. So while the Fed in June of 2022 had, I guess back then, I think it was $17.5 billion and they actually were hitting the cap then. So they committed to buy less $17.5 billion less, but they still had, I don't know what the exact numbers were anymore, but maybe they had 40, 45 billion that they had committed to buy two months ago that's now just hitting the balance sheet in June. So when that hits the balance sheet, it rises, the MBS line by, say, 40 billion. And that's when people are all trying to figure out how.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“I was just starting to really kind of get into all of this. And I'll go, let me see if I can actually do an engineering analysis on this, reverse engineer how the QT program works. And once I was able to do it, then I was like, well, let me write about this because I don't see anybody else who's like written about it in this detail of how it works. And that's when I started my start, pardon me, started my substack and did so. And it's kind of grown steadily from there. It's evolved from just putting out the regular monthly roll-off reports, the QT roll-off reports that I publish. It's kind of progressed from there to last May when we were in the midst of the debt ceiling impasse. And at the time, there's a Twitter user who had, I guess, asked slash challenged. Way me to project the X date.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“First thing that I started to decompose and break out. And of course, being in mortgage, I have a lot of adjacent kind of finance adjacent knowledge. I know the details of how mortgages work and such. And when the Fed started its QT program, of course, you know, if you recall back, you know, FinTwit back in June of 2022 was rife with all sorts of conspiracy theories about how the Fed's not doing this, the balance sheet is growing, even though we're technically supposed to be in QT. How the heck is this happening, the Fed's lying, all of that stuff, right? And I mean, look. You never know, right? As an engineer, I am open to the possibility that, well, maybe they are. Would I think they are? No, I think on the surface, that's kind of an absurd conclusion to reach. And I know a little bit about how mortgages work. And I know a little bit about how mortgages settle in the TBA market, et cetera, all of that. And so at the time, I was like, well, you know, this is kind of fun. I just joined Twitter.”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT
“Throughout my career, I built systems and I've reverse engineered systems, decomposed them in order to rebuild them or make them work. And I was kind of irritated at being bad for so long, generally speaking, at investing that I wanted to get better. And in order to do that, you have to understand how it actually works. That's been the mantra that's run through my engineering career is if you don't understand how it works, then good luck in terms of good luck in terms of interpreting the results that you get from a system or good luck trying to modify it to do something different. And so I just applied those engineering principles to various problems in the finance space. I guess starting with QT, if you go back to the”
2024-01-29 · Forward Guidance · U.S. Treasury Issuance To Exceed $1.1 Trillion (Gross) In Second Quarter, Predicts Plumbing Savant John Comiskey · IDENTIFIED FROM THE TRANSCRIPT