{"id":48528,"date":"2019-09-18T08:05:03","date_gmt":"2019-09-18T13:05:03","guid":{"rendered":"https:\/\/olduvai.ca\/?p=48528"},"modified":"2019-09-18T08:05:08","modified_gmt":"2019-09-18T13:05:08","slug":"liquidity-shortage-getting-worse-feds-repo-oversubscribed-as-funding-demand-soars-50-overnight","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=48528","title":{"rendered":"Liquidity Shortage Getting Worse: Fed’s Repo Oversubscribed As Funding Demand Soars 50% Overnight"},"content":{"rendered":"\n

Liquidity Shortage Getting Worse: Fed’s Repo Oversubscribed As Funding Demand Soars 50% Overnight<\/a><\/h3>\n\n\n\n

20 minutes after today’s repo operation began, it concluded and there was some bad news in it: as we feared, yesterday’s take up of the Fed’s repo operation which peaked at $53.2 billion has expanded substantially, and according to the Fed, today there was a whopping $80.05BN in bids submitted, an increase of $27 billion, or 50% more than yesterday<\/strong>.<\/p>\n\n\n\n

It also meant that since the operation – which is capped at $75BN – was oversubscribed by over $5BN, <\/strong>that there was one or more participants who did not get up to \u20ac5 billion in the critical liquidity they needed, <\/strong>and that the Fed will see a chorus of demands by everyone (because like with the discount window, nobody will dare to be singled out) to either expand the size of its operations, implement a fixed operation and\/or – most likely as per the ICAP note yesterday –  transition to permanent open market operations, i.e. QE<\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

<\/a>By comparison this is what yesterday’s repo operation looked like:<\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

<\/a>What is immediately notable is that except for agency paper, there was a greater use of both Treasury ($40.9BN to $51.6BN) and Mortgage-backed ($11.7BN to $27.8BN) collateral. The only silver lining: the step out rate on agency paper dropped from 3.00% to 2.1% however with virtually nobody using that, it is a largely meaningless easing in terms.<\/p>\n\n\n\n

Finally, the worst news is that immediately after the operation, overnight repo remained elevated, with Reuters reporting the rate was 2.25%-2.60% after the latest repo operation, confirming that the liquidity shortage continues with the high end of repo still far above fed funds.<\/p>\n\n\n\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Liquidity Shortage Getting Worse: Fed’s Repo Oversubscribed As Funding Demand Soars 50% Overnight 20 minutes after today’s repo operation began, it concluded and there was some bad news in it: as we feared, yesterday’s take up of the Fed’s repo operation which peaked at $53.2 billion has expanded substantially, and according to the Fed, today there […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[487,27197,6583,3650,4318],"class_list":["post-48528","post","type-post","status-publish","format-standard","hentry","category-economics","tag-liquidity","tag-liquidity-shortage","tag-repo","tag-us-federal-reserve","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=48528"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48528\/revisions"}],"predecessor-version":[{"id":48529,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48528\/revisions\/48529"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}