The T-Bill “treadmill”, and Brazil joins “oil for gold”

Yields cautious up , medium term, interviewee explicit

explicit

NDX cautious down , short term, interviewee implicit

implicit

RUT

Oil

Metals sharp up , long term, interviewee explicit

explicit

USD

FFTT 7.0
Management Consulting
Luke Gromen .0

The T-Bill “treadmill”, and Brazil joins “oil for gold”

metals

I think gold is going to be bigger than the dollar in global FX reserves within 2 to 3 years. Fiscal dominance in the US is inherently inflationary. Central banks (like Brazil's) are buying gold as the US 'prints' to buy commodities, making treasuries an unacceptable reserve asset. The oil market (6-10x gold's size) bidding for gold and continued central bank demand will drive prices significantly higher.

5 calls

+42

frequent correct calls with solid market follow-through

10/24/2025 8:00:10 PM	long term sharp up	60 days later	+30.90%	+46.35%

ndx

10-year yields at 4.6-4.8% would trigger equity volatility; basis trade unwind from repo pressure could create selling pressure; fiscal stress creates market instability

yields

Without sending 10-year treasure yields to rates that I estimate to be somewhere between 4.6 and 4.8% The structural inability to term out debt due to massive deficits creates upward pressure on long-term yields. The Fed's Standing Repo Facility provides a ceiling, suggesting a controlled, 'cautious' rise rather than a spike.

1 calls

+2

no reliable edge (random outcomes)

Luke Gromen

The 'treadmill problem': T-bill gross issuance has exploded from $100B/week in 2013 to $550B/week now, driven by high deficits and a policy shift to front-end issuance because the US cannot term out its debt without sending 10-year Treasury yields to 4.6-4.8%, which would trigger equity volatility.
Luke Gromen

Higher T-bill issuance mechanically raises the Treasury General Account (TGA), which crowds out overnight funding (repo) rates, threatening the funding for hedge funds engaged in the basis trade (who own $1.8T in Treasuries).
Luke Gromen

The Fed's Standing Repo Facility acts as a form of front-end yield curve control, mitigating repo stress and effectively funding deficits, which is stimulative.
Luke Gromen

The withholding of economic data is a 'Banana Republic' action and a 'buy gold and buy Bitcoin advertisement.'
Luke Gromen

Advice for retirees: Allocate 1-2% to Bitcoin (self-custody) and the rest of a 20% alternative allocation to physical gold. It's critical to own physical gold as fiscal dominance is 'not deflationary over time' and long-term bonds will destroy purchasing power.
Luke Gromen

For public market exposure to reshoring/electrification, consider ETFs: PAVE, GRID, and VOLT.
Luke Gromen

Brazil's central bank buying significant gold is an important clue. Gold is the de facto BRICS currency, not a basket.
Luke Gromen

The US printing treasuries to buy commodities means other nations cannot store wealth in treasuries anymore; they must go to gold. Gold just surpassed treasuries in global FX reserves.
Luke Gromen

I think gold is going to be bigger than the dollar in global FX reserves within 2 to 3 years.

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