Why did the FED let the yield curve invert, they could have lowered short term rates (buying short term bonds) sooner or sold off long term bonds (raising those yields). Then a market they largely control has interest rates triple in a day. This happened august 2007, from a separate cause do to the collateral being toxic MBS'. Unless I'm missing something.
Is this on purpose or are they getting sloppy at the FED. Are they signaling to the market that a downturn is coming?
>this is what happens after you wife them. simple solution, don't marry them
Jayden Stewart
Back to this
Why did the FED let the yield curve invert, they could have lowered short term rates (buying short term bonds) sooner or sold off long term bonds (raising those yields). Then a market they largely control has interest rates triple in a day. This happened august 2007, from a separate cause do to the collateral being toxic MBS'. Unless I'm missing something.
Is this on purpose or are they getting sloppy at the FED. Are they signaling to the market that a downturn is coming?
The Fed on Tuesday accepted $75 billion of $80.5 billion in bids submitted in its overnight repo operation, after accepting $53 billion on Monday. The repo rate was quoted at 2.25% to 2.60% after Tuesday’s operation from a range that was up to above it at 3%, just before it. That rate on Tuesday temporarily hit a high of 9%.
“They’re working on this repo problem. It’s a work in progress. They’re doing very well. They pretty much got it under control,” said Ralph Axel, rates strategist at Bank of America Merrill Lynch.
The Fed also trimmed the interest rate on excess reserves at its meeting Wednesday, in an effort to better control its fed funds rate. It trimmed it to 1.8%, a 30 basis point cut compared with the 25 basis point reduction for the benchmark funds rate, now at 1.75 to 2%.
“Generally this whole repo spike is declining, too. So you would expect fed funds to probably print a little bit lower tomorrow, but it may not be enough to be within the band,” said Axel.
Cameron Lopez
>But it's not the first that Trump has criticized the monetary policy set by foreign governments. At the beginning of the month, the president accused China and the European Union of intentionally deflating the value of their currencies, even as the U.S. dollar remains relatively strong.
"China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA," he wrote. "We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years!"
Michael Long
Matus said the short-term funding squeeze was probably the result of a number of events, including tax payment day, but he and others noted that it does not normally happen on tax day. “The repo market that we’re thinking of, the pre-crisis repo market of 2008 doesn’t exist any more. It’s a different market with different rules for banks and primary dealers,” he said.
Matus added that the staffing at the New York Fed is different. There is currently no permanent head of its markets group since Simon Potter left in June. Potter had served in that role since 2012. The markets group oversees implementation of domestic open market and foreign exchange trading operations for the Federal Open Market Committee. Axel said the market will be looking for answers from the Fed on how it will solve the problem permanently, particularly with the approach of the end of the quarter on Sept. 30, when there is more funding pressure as alternate financing is typically reduced at quarter end and repo is in high demand. There have been other incidents where rates in the repo market shot up including in December when markets were selling off.
“Does the Fed continue to roll over the $75 billion facility for the rest of the month? Or does it shift over to permanent operations?” said Axel. “Sept. 30 is another potential hot spot for funding rates. It’s a big issue to make sure they control rates on Sept. 30 to make sure they stay within their band.”
Axel said he believes the quick crunch came just as the Treasury Department moved to shore up its own cash reserves, which grew from $183 billion a week ago Wednesday to $298 billion by Monday “Since the 2011 debt ceiling crisis, Treasury has decided to maintain a very large cash balance,” said Axel, adding the Treasury previously did not find it necessary. He said the Treasury decided that its in the public interest to have a large cash balance should it ever need to absorb any problems in the Treasury funding market
Charles Rogers
>Axel said the funds are drawn from excess reserves which the Fed controls, and that lowers the money supply. “That’s why to offset this, and to solve the problems that were in the financing markets, the Fed added money to the money supply through open market operations which is the traditional role of the New York Fed,” he said. So trump yells about lowering rates and china inflating the yuan and the fed fights him on it because they want a strong dollar planning on a crash? FED barely budges so trump tells the treasury to increase their reserves so the fed has to inject 150 billion in the market?
None of you care except about the pictures of thots
I read about this and don't understand how it works but if the interest rate spiked to 9% and the fed pushed it back down to 3% that's a 6% difference. How do you profit from this? Were there any winners?
Carson Foster
>How do you profit from this? Were there any winners? hold BTC or gold and gold is a shaky one since it's losing buyers to crypto These are just signs the markets are prepping for bear season. It seems strange that debt markets funded by banks would run dry when rates are lowering.
Isaac Peterson
t. No kids & genetic deadend and a failure to your race and to the Lord himself.
Adrian Bennett
im an uncle and oldest of 4 bros, i'm good on kids. I'm white and my girl is asian, I know you guys hate that shit anyway I bet money you're either one of them pol posters who hate race mixing or your a bitter parent trying to sucker another one in, misery loves company
Blake Johnson
you guys buy shitcoins because you don't understand this shit is BTC real use case go learn, I know I am fred.stlouisfed.org/categories/24
