https://www.alhambrapartners.com/2019/09/17/nasty-number-four-repo-chaos-taf-makes-a-comeback-and-eff-shows-us-how-inept-officials-really-are/
There are seasonal bottlenecks which
litter the calendar. Why did Lehman fail two weeks before the end of the
third quarter of 2008? Bear Stearns, if you remember, came to the end
of its rope…two weeks before the end of that year’s first quarter. And
here we are again today two weeks before another quarter-end.
US money markets are in a state of
visible disarray. When repo is front page news that can’t be good. Most
people including those in the financial media have no idea what a
repurchase agreement even is or why there are so many of them.
And we’re still talking about yesterday
before even getting to the fireworks today. As it stood on Monday, the
effective federal funds (EFF) rate was 2.25%. The current policy range
is 2.00% to 2.25%, meaning EFF butted right up against the top end of
the range (15 bps above the joke, IOER). Since federal funds is how the
Federal Reserve communicated its monetary policy stance, this is a very
serious situation.
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