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Fed Injects $134BN In Liquidity, Term Repo Obersubscribed Amid Month-End Liquidity Panic

October 24, 2019

With stocks threatening to close in the red, late on Wednesday the Fed sparked a furious last hour rally...

 

... when in a a statement published at 1515ET, precisely when the S&P ramp started, the New York Fed confirmed it would dramatically increase both its overnight and term liquidity provisions beginning tomorrow through November 14th.

 

The Desk has released an update to the schedule of repurchase agreement (repo) operations for the current monthly period.  Consistent with the most recent FOMC directive, to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation...

 

As we noted yesterday, that was a massive 60% increase in the overnight repo liquidity availability (from $75 billion to $120 billion) and a 28% jump in the term repo provision (from $35 billion to $45 billion).

 

“It’s just more evidence the Fed will not back off as year-end gets closer,” said Wells Fargo's rates strategist, Mike Schumacher. "The Fed wants to take out more insurance. You had repo pick up last week. That might not have gone over too well."

 

FULL REPORT

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