MONEY, CREDIT AND ASSET PRICES - BUILD WEEKLY ROUNDUP - 2025 WEEK #36

TL;DR: Slowing job growth and declining bank deposits signal late-cycle dynamics, while banks accelerate Treasury purchases and global power realignments reshape energy markets.📖 BOOK: Gordon Pepper - Money, Credit and Asset Prices📄 SUMMARYJobs Data Confirms Economic SlowdownMatt Dines analyzes Friday's NFP report showing only 22,000 jobs added versus 75,000 expected, with the JOLTS report earlier in the week showing job openings at 7.18 million, missing expectations of 7.38 million.KEY INSIGHT: "basically every sector except for three... is now in job contraction" (5:37-5:40)Only education/health services and leisure/hospitality sectors show growth, reflecting the economy's narrow support base (6:08-6:20)The slowing trend in job creation has been consistent since 2021-2022 peak, suggesting continued economic deceleration aheadBanking System Shifts Signal Risk-Off PositioningAnalysis of the Fed's H.8 report reveals banks are dramatically reallocating from cash reserves to Treasury securities at an accelerating pace.POSITION SHIFT: Treasury holdings growing at 4.5% annualized rate while cash assets contract at over 5% annualized (24:55-25:10)Banks funding this transformation through trading liabilities rather than deposits, as deposit growth slows to just 0.3-0.4% (33:20-33:40)Matt references Gordon Pepper's liquidity theory framework: "asset prices tend to rise as a recession develops" (45:54-45:58)10-Year Treasury Yields Continue DeclineDespite Trump administration's tenure showing declining yields, the trend accelerates with bonds catching strong bids.This diverges from European sovereign debt where yields are rising, highlighting US Treasury strength (13:24-13:28)10-year yields trending down from 5% in Q3/Q4 2023, currently at 4.06% with room to test September 2024 lows of 3.63% (14:00-14:15)Treasury Secretary Scott Bessent's success metric of lower 10-year yields appears on trackShanghai Cooperation Organization Reshapes Global EnergyMajor Russia-China energy deal fundamentally alters global energy flows.Matt notes: "basically the entire Asian land mass has now been kind of organized behind this entity" (1:08:08-1:08:14)Power of Siberia 2 pipeline will redirect Russian gas from European to Chinese markets (1:12:25-1:12:40)Implications for Europe include increased dependence on US LNG as Russian supplies pivot eastwardFrench Political Crisis Catalyzes EU UncertaintyNo-confidence vote in French PM Bayrou signals deepening European political instability.France unable to pass budget with 5% deficit-to-GDP ratio despite it being lower than US levels (1:21:10-1:21:15)Split National Assembly between conservatives, centrists, and progressives creates ungovernable coalitionMatt suggests this is a "catalyst" event that will force broader EU response (1:26:28-1:26:35)🔑 KEY TAKEAWAYS- Banks' accelerating Treasury purchases while deposits slow confirms late-cycle dynamics and potential recession ahead- Job market weakness concentrated in narrow sectors suggests economy losing broad-based support- Global energy realignment through SCO strengthens Asia while leaving Europe vulnerable- Political instability in France may force ECB or EU-wide fiscal response- Watch for continued Treasury strength as recession expectations build🔗 LINKS- 🎧 Subscribe to the Build Weekly Roundup: https://open.spotify.com/show/7bvfjkPjQ67Eugg8EYdoe5- 🌎 Build Asset Management: https://getbuilding.com- ⚓ Build Bond Innovation ETF: https://bfix.fund- 📈 Build Secured Income Fund I: https://buildbitcoin.com📱 SOCIAL MEDIA- Build Asset Management: https://twitter.com/BuildMarkets- Matt Dines: https://twitter.com/LeveredUSTs- Cameron Otsuka: https://twitter.com/CameronOtsuka- Dave Martin: https://twitter.com/DaveMSocial This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.mineprinthash.com