{"id":51555,"date":"2020-03-04T09:18:05","date_gmt":"2020-03-04T14:18:05","guid":{"rendered":"https:\/\/olduvai.ca\/?p=51555"},"modified":"2020-03-04T09:18:08","modified_gmt":"2020-03-04T14:18:08","slug":"this-wasnt-supposed-to-happen-one-day-after-fed-rate-cut-repos-signal-record-liquidity-shortage","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=51555","title":{"rendered":"This Wasn&#8217;t Supposed To Happen: One Day After Fed Rate Cut, Repos Signal Record Liquidity Shortage"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.zerohedge.com\/markets\/wasnt-supposed-happen-one-day-after-fed-rate-cut-repos-signal-record-liquidity-shortage\">This Wasn&#8217;t Supposed To Happen: One Day After Fed Rate Cut, Repos Signal Record Liquidity Shortage<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Yesterday morning, when we discussed the sudden spike in liquidity shortage that resulted in both a (record) oversubscribed term repo and the first oversubscribed overnight repo since the start of the repo crisis, we&nbsp;<a href=\"https:\/\/www.zerohedge.com\/health\/liquidity-panic-back-feds-term-repo-massively-oversubscribed-amid-market-turmoil\">said&nbsp;<\/a>that &#8220;if going solely by the amount of securities submitted between the term and overnight repo, the overall liquidity shortage today was nearly $180BN, the highest since the start of the repo crisis,&nbsp;<strong>and a clear signal to the Fed that it needs to do something to further ease interbank lending conditions.<\/strong>&#8220;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Less than an hour later the Fed cut rates by 50bps in its first emergency intermeeting action since the financial crisis.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So with its emergency action now in the rearview mirror, did the Fed manage to stem the funding panic that has gripped repo markets following last week&#8217;s market bloodbath? The answer, if based on the latest overnight repo results, is a resounding no.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Moments ago, the Fed announced that its&nbsp;<a href=\"https:\/\/apps.newyorkfed.org\/markets\/autorates\/tomo-results-display?SHOWMORE=TRUE&amp;startDate=01\/01\/2000&amp;enddate=01\/01\/2000\">latest repo operation&nbsp;<\/a>was once again oversubscribed, with the full $100 million amount of repo accepted.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/repo%20record.jpg\" alt=\"\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">In other words, for the second day in a row the overnight funding repo operation was oversubscribed (and it is safe to say that tomorrow&#8217;s term repo will be oversubscribed as well).<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/ON%20repo%202020-03-04.jpg\" alt=\"\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/ON%20repo%202020-03-04.jpg?itok=AEcz728a\"><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This Wasn&#8217;t Supposed To Happen: One Day After Fed Rate Cut, Repos Signal Record Liquidity Shortage Yesterday morning, when we discussed the sudden spike in liquidity shortage that resulted in both a (record) oversubscribed term repo and the first oversubscribed overnight repo since the start of the repo crisis, we&nbsp;said&nbsp;that &#8220;if going solely by the [&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":[303,18529,6934,4318],"class_list":["post-51555","post","type-post","status-publish","format-standard","hentry","category-economics","tag-fed","tag-interbank-lending","tag-repo-market","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51555","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=51555"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51555\/revisions"}],"predecessor-version":[{"id":51556,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51555\/revisions\/51556"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}