4 ms·

I can't get through the paywall, but I'm not sure what the news is. The fed has been running this repo operation every day. On Thursday it was $78.7b, and on We

by lvs 7y ago

I can't get through the paywall, but I'm not sure what the news is. The fed has been running this repo operation every day. On Thursday it was $78.7b, and on Wednesday it was $70.1b. This liquidity injection has been ongoing for a few months. https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOWMORE=TRUE&startDate=01/01/2000&enddate=01/01/2000 https://apps.newyorkfed.org/markets/autorates/tomo-results-d... They are doing overnights to $120b daily. https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details https://www.newyorkfed.org/markets/domestic-market-operation...

everybodyknows 7y ago
FT describes an apparently escalating game of overnight "repo" borrowing, in order to meet regulatory limits, with the days at end of quarter apparently special: https://www.ft.com/content/1374afd4-181d-11ea-9ee4-11f260415385 https://www.ft.com/content/1374afd4-181d-11ea-9ee4-11f260415... This suggests a systemic instability.
- raviolo 7y ago
  Yeah but those with the term of one day is just replacing maturing repos - not adding new ones.
- lvs 7y ago
  There's definitely an imbalance at play here. But the Fed's actions have not been shifting dramatically. I don't know what the FT piece is referring to when they say they increased the size of Monday's operation. That is not reflected on the Fed's schedule of operations. The term offering Monday is distinct in the term length (~1 month), not its size. That means the value will be held on the Fed's books for longer than the 2-week term and overnight term operations that they've been running continuously. https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details#operation-schedule-parameters https://www.newyorkfed.org/markets/domestic-market-operation... I expect this longer term offer is because there is the expectation of year-end stress in outlays and could destabilize the market toward year-end. This term offering runs through the first week of Jan, so they're hoping to smooth over the possibility of year-end illiquidity.

by lvs 7y ago

everybodyknows 7y ago

FT describes an apparently escalating game of overnight "repo" borrowing, in order to meet regulatory limits, with the days at end of quarter apparently special: https://www.ft.com/content/1374afd4-181d-11ea-9ee4-11f260415385 https://www.ft.com/content/1374afd4-181d-11ea-9ee4-11f260415... This suggests a systemic instability.

raviolo 7y ago
Yeah but those with the term of one day is just replacing maturing repos - not adding new ones.
lvs 7y ago
There's definitely an imbalance at play here. But the Fed's actions have not been shifting dramatically. I don't know what the FT piece is referring to when they say they increased the size of Monday's operation. That is not reflected on the Fed's schedule of operations. The term offering Monday is distinct in the term length (~1 month), not its size. That means the value will be held on the Fed's books for longer than the 2-week term and overnight term operations that they've been running continuously. https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements/repurchase-agreement-operational-details#operation-schedule-parameters https://www.newyorkfed.org/markets/domestic-market-operation... I expect this longer term offer is because there is the expectation of year-end stress in outlays and could destabilize the market toward year-end. This term offering runs through the first week of Jan, so they're hoping to smooth over the possibility of year-end illiquidity.