Fed Preps $2T Bailout (Uncut) 04-10-2025

BREAKING: Fed Preps $2T Bailout as Hedge Fund Trade Implodes

The Federal Reserve is quietly preparing a multi-trillion dollar bailout, and it’s all because one of Wall Street’s riskiest hedge fund trades is imploding fast. While stock markets whipsaw and trade war tensions with China escalate, a much bigger crisis is brewing just underneath the surface in the bond market. But this isn’t just a problem for Wall Street.

Hedge funds are blowing up, liquidity is vanishing, and the Fed is eyeing a multi-trillion dollar injection just to stop the bleeding. But if this spiral continues, we could see mortgage rates rise, retirement counts disappear, and even bank bail-ins threatening you and your financial security. So how did the safest asset in the world, U.S. Treasuries, become the epicenter of systemic risk? What does this fallout mean for you and your financial future? And most importantly, how can you use this knowledge to protect yourself before it’s too late? Let’s get into it.

In case you missed it, last week I reported on a massive vulnerability in the U.S. Treasury market that almost no one is watching, the hedge fund basis trade. Now, it sounds boring, safe almost, to exploit tiny price differences between U.S. Treasuries and futures. But here’s the problem.

They’re doing it with massive amounts of borrowed funds. We’re talking 10 to 1 leverage or more. These hedge funds, they’re betting hundreds of billions on what should be tiny stable spreads.

In fact, these hedge funds now hold roughly a trillion dollars of U.S. Treasury securities, meaning that they account for 11 percent of the entire market alone. So if they’re forced to unwind, the exposure could balloon upwards of 8 trillion dollars. Now, typically when the stock market plunges, we see money flood into bonds as a safe bet.

But this past week we’ve been seeing the opposite, a bond market sell-off causing a lot of volatility. And for these highly leveraged funds, any small shift is dangerous. But this kind of volatility is deadly.

So who is selling and causing all of this? Well, this is where the plot thickens. See, as trade war tensions with China grow, it is the lenders behind the hedge funds, these large financial institutions who are getting spooked about being paid back. So they are pulling liquidity from the hedge funds.

They are saying no more. We’re not going to roll over these loans. And they’re issuing margin calls, essentially demanding that the hedge funds put up more collateral.

And as you can guess, these over-leveraged hedge funds, they just don’t have it. So what are these hedge funds doing? They’re initiating their own doom loop. They’re scrambling to raise cash by selling off the only asset they have left, U.S. Treasuries.

Yes, that’s right. The safest asset in the world, U.S. Treasuries, is being dumped in mass by hedge funds. But this wave of force selling, well, it’s creating something we have seen before, systemic risk.

The same phrase that prompted the 2008 bank bailouts, except this time it’s not banks, it’s hedge funds. And this time, instead of $700 billion, we could be staring down a multi-trillion dollar bailout. Don’t believe me or don’t think it’s going to happen.

I’ll prove why it’s not only possible, but very likely. First, two weeks ago, before Treasury yields spiked, financial experts and insiders were already urging the Fed to create a hedge fund bailout tool, meaning this crisis wasn’t a surprise. It was anticipated.

And in their minds, they already have the answer, the solution, a bailout. Second, this already happened in 2020 when margin calls hit Treasury futures, the same thing that’s happening right now. What happened? The Fed stepped in and pledged trillions.

We already know how this plays out. Third, if you want hard proof that something is breaking right now, that it’s not just temporary volatility, all you have to do is look at the SOFR spread, the secured overnight financing rate, a key indicator in measuring bond market stress. When it drops, it means banks are panicking, liquidity is drying up, and we are in trouble.

Let’s look at it together. You can see right here that spread drops to a record low, meaning that the system is seizing up. In simple terms, money is not flowing.

Institutions are dumping even high quality assets just to raise cash. This chart alone shows us that this system is screaming things are not okay. But here’s the scariest part.

The unwind has only just begun, and the Fed, they’re cornered. Either way, we lose. If they choose to bail out hedge funds, well, we already know how that plays out.

Inflation will skyrocket, and it will be you and I who pay, while those who were reckless with their debt will walk away untouched. But if the Fed waits too long, it puts the entire treasury market at risk, the treasury market, which is the underpinning of the global financial system. It would make what happened this past week in the stock market look like nothing.

We could expect to see a serious crash. 401ks, retirement plans, IRAs, all that are tied up and rely heavily on bonds, those would all be seriously impacted. We could see credit freeze, businesses fail, and of course, inflation leading to hyperinflation, meaning the cost of everyday living would go through the roof.

And yet, that’s not even the worst part because there is one more consequence of this that could change our lives forever. Now, zoom out with me for a second and look at the United States on a global level. It’s no secret that for years, nations have been reducing their reliance on the dollar and moving away from dollar reserves.

I talk about this all of the time, but now something has changed. Instead of slowly reducing their holdings or slowly buying less, it’s almost as if these nations have been given a green light to stop buying U.S. treasuries, that maybe, just maybe, there are safer options out there, and for once, they don’t have to fear retaliation from the United States. And stay with me on this one because it ties directly to U.S. banks and your savings.

Now, the U.S. government, they sell U.S. treasuries at auction to finance the debt. Debt that, as we all know, is costing us over a trillion dollars annually just on the interest. But what happens when demand for that debt drops? The government has to raise rates to attract new buyers, making the debt even more unsustainable.

And that’s exactly what just happened. This week, a U.S. treasury auction saw shockingly weak demand from investors. But when foreign buyers don’t step up, guess who is forced to? U.S. banks.

This week, U.S. banks bought a whopping 20.7% of total auctioned debt, meaning two things. Number one, global confidence in the United States and the U.S. dollar is weakening. Number two, U.S. banks are now forced to hold all of this unwanted risk.

But here’s where it gets personal. When banks are forced to buy up all of these treasury bonds, well, what happens when the value drops or volatility increases? Now, these banks are sitting on massive unrealized losses, something we’ve already seen that we cannot afford to get worse. These are the same institutions that are supposed to be protecting our deposits.

And under the current rules, it’s not the government who’s going to be forced to save these banks anymore. No, it’s you. Under Frank Dodd, it’s you and me and everyday Americans whose finances can be used to plug this hole.

Ask yourself, if treasury demand keeps collapsing and banks are forced to keep buying, how safe are your funds in your bank, really? And before someone out there says, oh, bank balance, that will never happen. It’s never. It has happened in Lebanon, Cyrus, Greece.

And before someone else says, OK, but that’s not the United States. It actually has happened here in the United States. A couple of months ago, a failed Oklahoma bank, First National Bank of Lindsay, they weren’t bailed out.

They weren’t bought out. Now, anyone in there who had over two hundred fifty thousand dollars, all of the uninsured deposits were taken to make the bank whole again. Now, I had never heard of this until one of our viewers, Pat, wrote in to tell me about it, because I’m guessing they didn’t want it to make national news.

But make no mistake, you can sit there and say, well, they shouldn’t have had more than the insured amount. But there is a reason that they made sure everyone knew that with Silicon Valley Bank, all of the depositors were made whole again. They don’t want anyone questioning if your cash is safe in banks.

And I’m not sitting here proposing a bank run, but I am saying this was just the tip of the iceberg. If you think that even the up to two hundred and fifty thousand will be safe, think again. We’ve seen how bank bail ins play out in other countries.

We know that accounts can be frozen for years. And what happens during that time period? They devalue or revalue the currency, meaning not only can you not access your funds, but whatever you had in there is worth tremendously less by the time you even get access. And that’s depending on how much they let you have.

And if you still don’t believe me, you can hear it straight from the FDIC, the Federal Deposit Insurance Corporation themselves. In one of their meetings, they laughed at the American people for not knowing about what bail ins were and think it’s better that way because they don’t want people scared. I think you’ve got to think of the unintended consequences of taking a public that has more faith and confidence in the banking system than maybe people in this room do.

These are the people who make sure your deposits are safe. Let’s call it what it is. The government offloads their debt onto banks.

Banks then carry the risk and burdened by the debt. With all of these losses, you become the backstop. But while all of this is scary and I hate to be the one to sit here and tell you about it all, there is one piece of good news, which is that you still have time.

Although all of this is happening quickly, we are still in the early stages of this hedge fund wind down, meaning you can still take action. The first thing I recommend is get clear on a plan, have a strategy in place. Make sure you understand the risk that you’re up again and how you can not only survive, but thrive on the other side of this.

And second, reduce your exposure. When these institutions fail and the dollar continues to lose its purchasing power, you are going to want to make sure that you do not have the counterparty risk that you might have today in dollar denominated assets. Anything that the dollar touches, you cannot be confident in, right? So for me personally, that means holding physical gold and silver, something that is outside of their system that I know is true wealth that does not carry the same counterparty risk.

You can see the writing on the wall. You know what’s coming next. You don’t need me to tell you, but whether or not you buy gold and silver from us at ITM Trading or from somewhere else, what’s most important is that you have it now before it’s too late.

I highly, highly, highly encourage you. If you do not already have a strategy in place, make sure you get one. That is what we specialize in here at ITM Trading, is helping not only educate people, but helping people create a custom strategy, one that will set you up again for success on the other side to protect your wealth and to come out the other side stronger.

So if you are concerned about any of this and you have questions or you want to make sure that you have that strategy in place, you can talk to one of our expert analysts. All you have to do is call us at the number below or you can click the link in the description and set up a time that works for you. You can scan the QR code on the screen and set up a time that works for you.

I talk about our analysts all the time because they truly are the best in the business. Number one, not only because they are the most knowledgeable, I have learned so much from all of them, but number two, because they really, truly care in helping people just like you. So do it right now while you’re thinking about it.

I hear people call in all the time and say, I wish I had done this sooner, kicking themselves. Do not be one of those people, especially with what we have coming up next. So as always, I so appreciate you being here.

I’m Taylor Kenney with ITM Trading, your trusted source for all things gold, silver, and lifelong wealth protection. Until next time.