{"id":48689,"date":"2019-09-27T17:30:44","date_gmt":"2019-09-27T22:30:44","guid":{"rendered":"https:\/\/olduvai.ca\/?p=48689"},"modified":"2019-09-27T17:30:52","modified_gmt":"2019-09-27T22:30:52","slug":"weekly-commentary-no-coincidences","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=48689","title":{"rendered":"Weekly Commentary: No Coincidences"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"http:\/\/creditbubblebulletin.blogspot.com\/p\/about.html\">Weekly Commentary: No Coincidences<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">September 20 \u2013 Wall Street Journal (Daniel Kruger): \u201cThe Federal Reserve Bank of New York will offer to add at least $75 billion daily to the financial system through Oct. 10, prolonging its efforts to relieve funding pressure in money markets. In addition to at least $75 billion in overnight loans, the New York Fed\u2026 will also offer three separate 14-day repo contracts of at least $30 billion each next week\u2026 On Friday banks asked for $75.55 billion in reserves, $550 million more than the amount offered by the Fed, offering collateral in the form of Treasury and mortgage securities. The Fed\u2019s operation was the fourth time this week it has intervened to calm roiled money markets. Rates on short-term repos briefly spiked to nearly 10% earlier this week as financial firms looked for overnight funding. The actions marked the first time since the financial crisis that the Fed had taken such measures.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With the Lehman collapse setting off the \u201cworst financial crisis since the Great Depression\u201d, instability in the multi-trillion repurchase agreement marketplace generates intense interest. This market for funding levered securities holdings is critical to the financial system\u2019s \u201cplumbing.\u201d It&#8217;s a market in perceived \u201cmoney\u201d \u2013 highly liquid and virtually risk free-instruments. If risk suddenly becomes an issue for this shadowy network, the cost and availability of Credit for highly leveraged players is suddenly in question. And any de-risking\/deleveraging at the nucleus of the global financial system would pose a clear and present danger for sparking \u201crisk off\u201d throughout Credit markets and financial markets more generally.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">I\u2019ll usually begin contemplating the CBB on Thursdays. This week\u2019s alarming dislocation in the \u201crepo\u201d market was clearly a major development worthy of focus. But I was planning on highlighting the lack of initial contagion effects in corporate Credit, a not surprising development considering the New York Fed\u2019s aggressive liquidity injections.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Weekly Commentary: No Coincidences September 20 \u2013 Wall Street Journal (Daniel Kruger): \u201cThe Federal Reserve Bank of New York will offer to add at least $75 billion daily to the financial system through Oct. 10, prolonging its efforts to relieve funding pressure in money markets. In addition to at least $75 billion in overnight loans, [&hellip;]<\/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":[7756,16861,303,861],"class_list":["post-48689","post","type-post","status-publish","format-standard","hentry","category-economics","tag-credit-bubble-bulletin","tag-doug-noland","tag-fed","tag-wall-street-journal"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48689","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=48689"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48689\/revisions"}],"predecessor-version":[{"id":48690,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48689\/revisions\/48690"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48689"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}