The Fed is extending its overnight repo program for another month. This is where the Fed will give you “cash” for your treasuries overnight. The rates are pretty high right now...and the Fed is selling 40-$50 billion every night.
This points to a liquidity problem in the market—which is “normal” at the end of a quarter. But not normal going into November.
Yes, more reading the goat entrails.....
The Fed is extending its overnight repo program for another month. This is where the Fed will give you “cash” for your treasuries overnight. The rates are pretty high right now...and the Fed is selling 40-$50 billion every night. This points to a liquidity problem in the market—which is “normal” at the end of a quarter. But not normal going into November.
“The Fed is extending its overnight repo program for another month... This points to a liquidity problem in the market”
Demand is high for US dollars, as other major bond options have cut their interest rates (some to zero, or even negative), and as other major economies face a more recessionary outlook. Not enough dollars in supply for all those looking to get in.
Time for the Fed to increase liquidity.