New York Fed Again Upsizes Liquidity Plans for Turn of the Year
1–10 of 113 posts
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#2Maybe this is where some of the missing Pentagon money has gone?
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#3Ever since this whole repo issue started, we've been told that the ever incresing sums of money that are put into the system are just a "short term" thing, yet no end date is ever announced. Not to mention that the actual cause for the spike in repo rates has never been announced or identified.
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#4> The New York Fed’s repo (repurchase agreement) loan program began on September 17 when repo loan rates spiked from approximately 2 percent to 10 percent
Here is some context on the September 2019 bailout (dated September 23), and they actually foreshadow that more intervention would be likely:
https://fortune.com/2019/09/23/repo-market-big-deal-400-bill...
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#5This repo operation is YUGE, but the writer of the article is adding his/her numbers up wrong (and perhaps on purpose).
If I lend you $50 overnight, and then you repay. And then I lend you another $50 overnight and you repay, most market folks would consider this $50 in credit/loans, not $100 in credit/loans.
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#6What's the obsession with the NYT specifically, in contrast to other news outlets? It made the post rather irritating to read.
I'm not American, so I feel like I'm missing the significance that might be obvious to everyone else.
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#7Ever since this whole repo issue started, we've been told that the ever incresing sums of money that are put into the system are just a "short term" thing, yet no end date is ever announced. Not to mention that the actual cause for the spike in repo rates has never been announced or identified.
I believe there are two main causes.
First, the massive issuance of treasuries used to fund the persistent and growing US budget shortfalls. As the big Wall Street banks have been tasked with buying up treasuries, massive amounts of liquidity have been siphoned out of the market. The Fed Will ultimately have to restart QE (in perpetuity) in order to fund the debt.
Second, hedge funds have been taking advantage of the repo markets, funding massive leveraged trades. Of course as the Fed pumps more liquidity into the system, these hedge funds will only ramp up their leverage. This is why Fed lending will be perpetually insufficient, because any increase in lending will just be used to support more and more leverage. It's like throwing paper towels at a water main break.
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#8Ever since this whole repo issue started, we've been told that the ever incresing sums of money that are put into the system are just a "short term" thing, yet no end date is ever announced. Not to mention that the actual cause for the spike in repo rates has never been announced or identified.
[deleted]
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#9Ever since this whole repo issue started, we've been told that the ever incresing sums of money that are put into the system are just a "short term" thing, yet no end date is ever announced. Not to mention that the actual cause for the spike in repo rates has never been announced or identified.
> we've been told that the ever incresing sums of money that are put into the system are just a "short term" thing, yet no end date is ever announced
Short-term as in short-term financing, i.e. overnight lending.
Nobody expects repo to go away in the same way nobody expects interest paid on excess reserves to go away. It's a tool the Fed uses to manage the money markets. Because the Fed is the Fed, it's almost alway going to be the cheapest counterparty to borrow from.
Re: New York Fed Again Upsizes Liquidity Plans for Turn of the Year
#10This repo operation is YUGE, but the writer of the article is adding his/her numbers up wrong (and perhaps on purpose). If I lend you $50 overnight, and then you repay. And then I lend you another $50 overnight and you repay, most market folks would consider this $50 in credit/loans, not $100 in credit/loans.
The distinction between credit and debt is crucial here.