Dominic Konstam & Rohit Goel on Treasury Supply, Basis Trades, and India's New Capitalism

Treasury Supply Dynamics

• 📉 Treasury supply is high, but demand from traditional sources like foreign entities appears to be waning.
• 🏦 Banks are increasing their purchases of treasuries, partly driven by deregulation efforts.
• 📊 A significant portion of treasury ownership is now held by non-bank financial entities through basis trades.
• 💡 These basis trades involve liquidity risk but generally not duration or credit risk, and could absorb more treasuries.

Basis Trades and Liquidity

• 🧩 The Federal Reserve's actions, such as targeting funds and repo rates, can alleviate liquidity concerns for hedge funds engaged in basis trades.
• 🏦 This mechanism provides an alternative avenue for absorbing treasury supply without relying on traditional foreign buyers like China or Japan.

India's New Capitalism

• 🇮🇳 Rohit Goel discusses India's economic trajectory, framing it as a form of "new capitalism."
• 🚜 The focus is on safeguarding the interests of Indian farmers and domestic businesses.
• ⚠️ The speaker notes the presence of challenges, metaphorically referred to as a "big bad wolf" (President Trump), while emphasizing the need to stay the course for India's economic growth.