It used to be that at each quarter’s end the repo rate would rise often quite far. You may recall the end of 2018, following a wave of global liquidations and curve collapsing when the GC rate (UST) skyrocketed to 5.149%, nearly 300 bps above the RRP “floor.” Chalked up to nothing more than 2a7 or “too many” Treasuries, it was to be ignored as the Fed at that point was still forecasting inflation and rate hikes. Total financial resilience otherwise. Yesterday was,...
Read More »A Repo Deluge…of Necessary Data
Just in time for more discussions about repo, the Federal Reserve delivers. Not in terms of the repo market, mind you, despite what you hear bandied about in the financial media the Fed doesn’t actually go there. Its repo operations are more RINO’s – repo in name only. No, what the US central bank actually contributes is more helpful data. Since our goal is to use that data to produce the best possible, most accurate interpretation of the facts, the depth and...
Read More »US Banks Haven’t Behaved Like This Since 2009
If there is one thing Ben Bernanke got right, it was this. In 2009 during the worst of the worst monetary crisis in four generations, the Federal Reserve’s Chairman was asked in front of Congress if we all should be worried about zombies. Senator Bob Corker wasn’t talking about the literal undead, rather a scenario much like Japan where the financial system entered a period of sustained agony – leading to the same in...
Read More »Non-Randomly Surveying RMB
China’s central bank, unlike other central banks, is constantly active almost never resting. Because it is always in motion, the PBOC can seem to be “adding” liquidity at the very same time it might be “draining” it. Its specific actions should never be interpreted as standalone procedures related solely to some unknown policy stance. That is particularly true given that we know what their stance is and has been –...
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