Macroscopic Podcast Michael Howell: FED's hidden QE, REPO blowout and the U.S.-China LIQUIDITY war
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Nov 8, 2025 
Michael Howell, a macro strategist and liquidity expert, dives into the intricacies of the repo market and the Fed's hidden QE strategies. He discusses why liquidity is critical for the financial system and the looming refinancing risks from 2025 to 2028. Howell highlights the operational dynamics of Treasury QE and the rising competition between the U.S. and China over collateral and gold. With China devaluing its yuan and increasing gold reserves, he outlines the potential bifurcation in global liquidity systems, urging investors to strategically position their assets.
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SOFR Spread Reveals Hidden Tightness
- SOFR trading above Fed funds shows collateralized funding shortages.
- Elevated SOFR spreads mean market pricing implies higher effective rates than the Fed target.
Prepare For A Liquidity Cycle Turn
- Stay invested but prepare for deteriorating liquidity and a potential cycle turn in 2025–26.
- Monitor repo conditions and SOFR spreads as early warning signals.
Fed Likely To Resume Modest Treasury Buying
- Fed could restart purchases (~$20bn/month) to flatline liquidity instead of deep QT.
- That would stabilise reserves but not restore abundant liquidity conditions.