Silver Retraces Entire Post Crude Margin Hike Loss, Even As General Collateral Rates Rise On Broad Liquidity Withdrawal

Tyler Durden's picture

While the equity market resumed its now traditional (for the past 6 months) smooth levitation, with little to no volatility and even less volume, the most interesting asset class was silver, which after dropping to under $32 yesterday, following the various attempts by the administration to kill assorted commodities, rose by 4% today, closing at the day's highs and wiped out the entire loss from yesterday. Ironically, this happened even as general collateral rates rose today. "The reason for the rise is an increase in the volume of Treasury securities available to be used in the repo market as general collateral. The Treasury Department on Friday settled an issue of $25 billion in 49-day cash management bills, and the $99 billion in new notes it auctioned this week will settle on Monday." Of course, this was offset by another 56-Day CMB offsetting the winding down SFP (total SFP holdings are now cut in half to just $100 billion). So despite a major liquidity extraction from the market, not only did stocks rise (which can traditionally be attributed to POMO in a low volume environment), but the biggest beneficiary was silver, meaning that even in a tight liquidity regime, most investors now prefer to pursue commodities as an investment class, something which had not happened previously.