Repo Panic Returns As Fed Injects $99bn In Liquidity

Discussion in 'News, Current Events, and Politics' started by LastOutlaw, Jan 7, 2020.

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  1. LastOutlaw

    LastOutlaw Master Survivalist
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    https://www.zerohedge.com/markets/r...s-first-oversubscribed-term-repo-mid-december

    Repo Panic Returns As Fed Injects $99BN In Liquidity, Including First Oversubscribed Term Repo In Three Weeks
    by Tyler Durden
    Tue, 01/07/2020 - 09:12

    And just like that, the repo market is on the fritz once again.

    More than two weeks after the last oversubscribed term repo operation on December 16, moments ago the Fed announced that Dealers are once again scrambling for liquidity, submitting $41.12BN in securities ($30.7BN in TSYs, $10.42BN in MBS) into today's 2-week repo operation, which was oversubscribed hitting the maximum operation limit of $35BN.

    2428c940cdca28594616d2da1069ee58.jpeg

    Today's oversubscription was ominous because while the liquidity shortage into year-end was expected, and justified the barrage of term repos ahead of the "turn", the liquidity shortage was supposed to normalize after the new year. Alas, that appears to not have happened, and today's submission was the highest since Dec 16.

    2428c940cdca28594616d2da1069ee58.jpeg

    One reason for today's repo spike is that as we noted last Friday, this is the first week that sees substantial term repo maturities and liquidity drainage, as follows:

    • $25 billion leaves the market on Monday,
    • $28.8 billion on Tuesday,
    • $18 billion next Friday
    But wait there's more: today's oversubscribed term repo, coupled with yesterday's overnight repo surge and this morning's $63.919BN overnight repo ...

    2428c940cdca28594616d2da1069ee58.jpeg


    ... means the Fed just injected a total of $99BN to keep the levitation party going, and confirms that the repo market remains paralyzed.

    Worse, any attempts to drain liquidity from the repo market, or generally slow down the shrinkage of the balance sheet, will be met with failure. It is also another indication that the repo market now holds the Fed hostage, with Powell now trapped in not only injecting liquidity via QE4, i.e., the monetization of T-Bills, but continued reliance on repos in the $250BN range.

    Of course, should the Fed threaten to pull even a bit more liquidity than the market is comfortable sacrificing, and stocks get it. The flip side too: as long as the Fed keeps growing the balance sheet at a rate of about $100 billion per month, the market meltup will continue.
     
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  2. LastOutlaw

    LastOutlaw Master Survivalist
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    This is an ongoing problem that they can't seem to fix. They are forced to keep putting millions in month after month just to break even.
     
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  3. Sourdough

    Sourdough "eleutheromaniac"
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  4. Pragmatist

    Pragmatist Master Survivalist
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    Good morning Last Outlaw,

    It is not supportable to say that the repo market holds the Fed hostage.

    If a 20 year time line is used, Trump's (the Fed works for Trump regardless of what MITRE and RAND reports say) economic ad financial programs are working and successful.

    The bloated and partly useless Defense budget is SMALLER than the debt-service budget and all the real indicators show Trump is removing the decay and fiefdom programs from the national economy.
     
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  5. LastOutlaw

    LastOutlaw Master Survivalist
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    I think what they are saying is that the FED can not quit putting money in ti keep the system running. The orginal plan was to prop it up a bit until it stabilized. However it has not stabilized and keeps needing more money put in to keep things running as they should. I believe this is the biggest of the banks and their debt on loans to each other that is failing. While DJT probably is removing a lot of the bloated scams from our government the banks themselves cannot seem to be able to handle the debt between themselves. As for DJT being in charge of the FED that is not the case. Rothschilds and Payseurs are in charge of the FED. While DJT may appoint someone to be on the board he in no way can make them do anything or he already would have. It is a sticky wicket the FED is.
     
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  6. Old Geezer

    Old Geezer Legendary Survivalist
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  7. Pragmatist

    Pragmatist Master Survivalist
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    Good morning Last Outlaw,

    The money system is stabilized. The basic indicators support this. The Social Security checks are sent out as a matter of routine. This occurs because the money is collected from labor force to send to the retirees. US foreign debt, so far, has no big defaults.

    Not all US (and US branches of foreign banks) banks are needed for economic recovery. Think of related industry examples: Penn Central Railroad, Flying Tiger Lines, Moore McCormack, the Diablo Canyon and Mohawk Valley nuclear power plants. There must have been a reason Chase Manhattan Bank and J.P. Morgan had to merge.

    If you use a US family name like, eg, Rockefeller (or, eg Dillingham, Dole, DuPont), I agree. Trump works for them. Team Trump does direct and control the Fed in the overall scheme. It's just about the same people and this is called the "Eastern Establishment".
     
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