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gc repo rate

Banks Or (euro)Dollars? That Is The (only) Question

By |2020-04-01T17:02:26-04:00April 1st, 2020|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

It used to be that at each quarter’s end the repo rate would rise often quite far. You may recall the end of 2018, following a wave of global liquidations and curve collapsing when the GC rate (UST) skyrocketed to 5.149%, nearly 300 bps above the RRP “floor.” Chalked up to nothing more than 2a7 or “too many” Treasuries, it [...]

Head Faking In The Empty Zoo: Powell Expands The Balance Sheet (Again)

By |2019-10-08T18:56:47-04:00October 8th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

They remain just as confused as Richard Fisher once was. Back in ’13 while QE3 was still relatively young and QE4 (yes, there were four) practically brand new, the former President of the Dallas Fed worried all those bank reserves had amounted to nothing more than a monetary head fake. In 2011, Ben Bernanke had admitted basically the same thing. [...]

What’s The Verdict On This Week?

By |2019-09-19T18:50:58-04:00September 19th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Jay Powell’s disastrous week is coming to a close, not yet his long nightmare. He has been battling fed funds (meaning repo) for his entire tenure dating back to February 2018. This week wasn’t the conclusion to the contest, just the latest and biggest round of it. According to DTCC, the GC repo (UST) rate came back down to 1.975% [...]

Nasty Number Four: Repo Chaos, TAF Makes A Comeback, and EFF Shows Us How Inept Officials Really Are

By |2019-09-17T11:58:32-04:00September 17th, 2019|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There are seasonal bottlenecks which litter the calendar. Why did Lehman fail two weeks before the end of the third quarter of 2008? Bear Stearns, if you remember, came to the end of its rope…two weeks before the end of that year’s first quarter. And here we are again today two weeks before another quarter-end. US money markets are in [...]

Maybe The Grand Celebration For The Early End of QT Starts Tomorrow?

By |2019-07-31T18:14:51-04:00July 31st, 2019|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Perhaps too much attention was given to “one-and-done”, the knee-jerk disappointment over what everybody is saying was not enough “dovishness.” And while that may have been true as it relates to main star of the puppet show, rate cuts, the FOMC actually did deliver better theater at least with a secondary character. The latest official statement announced the Federal Reserve [...]

So Close, Yet So Far

By |2018-11-08T18:26:04-05:00November 8th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The effective federal funds (EFF) rate actually dipped 1 bp last Friday. Having spent the prior eight trading days equal to IOER at 2.20%, it might’ve been heartening for US central bankers under siege. After all, they adjusted that particular policy tool back in June and then in July said this whole EFF thing was due to “special factors” that [...]

Anticipating How Welcome This Second Deluge Will Be

By |2018-08-28T16:36:39-04:00August 28th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Effective federal funds (EFF) was 1.92% again yesterday. That’s now eight in a row just 3 bps underneath the “technically adjusted” IOER. If indeed the FOMC has to make another one to this tortured tool we know already who will be blamed for it. The Treasury Department announced yesterday that it will be auctioning off $65 billion in 4-week bills [...]

Very Strong(ly Worried)

By |2018-07-05T18:47:25-04:00July 5th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Inflation hysteria and the boom hysteria may both seem like they are one and the same thing. They are related, sure, and they represent similar objects. However, there are subtle differences. The mania over inflation, for example, has subsided while the one about the economy reaches its own feverish pitch. In early June, Newt Gingrich appeared on ABCNews’ The View [...]

Talk About Binary; No In Between, Either Boom or Renewed Deflation

By |2018-07-05T17:22:38-04:00July 5th, 2018|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

CNY has held up over the last few days after Chinese officials intervened. Central bank actions like these tend to work if only over the very shortest timeframes. The tentative calm there, however, hasn’t extended universally. Copper, for one, has fallen right out of its Reflation #3 range. Selling off solidly for almost a month now, today it was pounded [...]

The Remarkable And Lengthy Consistency of Repo

By |2018-06-25T18:11:32-04:00June 25th, 2018|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Before August 2007, US$ money markets operated efficiently and predictably. They behaved according to a rigid hierarchy, which is a good thing no matter how it may sound. This inflexibility in the context of funding markets was exactly what we would want. Arbitrage opportunity was responsible for enforcing the rules. One simple example was the difference between repo and federal [...]

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