Reverse Repo

China Central Bank Injects A Record 1.035 Trillion In Bank Liquidity This Week

With liquidity still scarce, moments ago on Thursday morning, the PBOC added another net injection of 190 billion consisting of 100Bn in 7-day repo and 150BN in 28-day repos, offset by 60bn yuan in previous loans maturing. As a result, the PBOC has injected a net of 1.035 trillion yuan via reverse repos so far this week, an all time high.

Fed Revises Reverse Repo Terms: This Is How It Will Implement The Rate Hike

As expected, in addition to raising the Fed Funds rate by 25 bps, the Fed similarly noted that it would revise the mechanics behind its reverse repo operations, raising the rate it charges on reverse repos by 25 bps to 0.5%, the actual means by which the Fed will hike rates for most market participants. Here is the statement that the Fed released regarding the change in overnight reverse repos.

Global Stocks, US Futures Rebound As Oil Rises, Dollar Drops

Stocks across the board, and US equity futures are broadly in the green this morning as markets shrug off the terror-related events in the NYC area over the weekend.  There wasn’t a single positive “reason” for the green price action but fears about the bond “tantrum” appear to be fading while a stronger dollar helped push oil and the commodity complex higher.

With Janet Yellen Just Hours Away, Directionless Markets Wait For A Signal

With Yellen's much anticipated speech just hours away, the already comatose market flatlined overnight in another directionless session, with European stocks and US equity futures practically unchanged, while Asian shares to a two-week low, led by Japan, as investors showed a reluctance to take on risk before Yellen’s speech. The dollar was a tad lower, along with oil which is set for its first weekly drop in a month. 

Currency Wars Escalate As Fed Treasuries In Custody Tumble To 2012 Lows

The latest custody data from the Fed shows that reserve manager holdings of Treasuries has tumbled by $17 billion in the past week, to the lowest effective level since late 2012. The prevailing hypothesis is that smaller central banks and reserve managers sell US paper to defend their currencies, while OPEC countries such as Saudi Arabia are quietly raising cash in an environment of low oil prices and acute budgetary tightness.

Connect Just Two Dots, See All The Rest

Dealers, the bedrock of the global monetary system, are hoarding collateral and it shows. That, however, doesn’t fit within the recovery narrative, so the media resorts to the easy and absurd to obscure what “should” not be happening...

General Collateral Rate Surges To Post Fed-Hike Highs On Quarter End Window Dressing

The overnight general collateral rate has jumped to 0.75% this morning. The GC rate has spiked at the end of every quarter for over a year, as money funds face increased regulations and need to streamline their balance sheets at quarter end, in other word "window dress" balance sheets and make them appear better than they are for regulatory purposes.

"We Don't Have A Wonderful Explanation What Is Going On" - Reverse Repo Usage Plunges To Program Lows

Moments ago the Fed's RRP operation totaled only $18.7 bln, the lowest level of participation since December 19, 2013 when the maximum bid per counterparty was only $1 bln compared to $30 bid since September 2014. In other words, program participants took only $18.7 billion worth of Treasury securities from the Fed, just months after the Fed expanded the reverse repo program to account for potentially hundreds of billions in reverse repo demand after the Fed's 25 bps rate hike. What is going on? For the answer we looked to repo experts Stone McCarthy, but unfortunately they too are stumped: "We don't have a wonderful explanation for the diminished participation."

Month-End Market Weakness Looms As Monetary Base Trumps Buybacks

Regardless of which source ultimately proves more important, the below suggests that market liquidity tends to become more scarce around the end of the quarter at present. We have already seen this effect play out twice in row and it could well be that there will be another replay this quarter.

Will The Fed Follow The BoJ Down The NIRP Rabbit Hole?

At this point, one wonders why any central banker would chase down the NIRP rabbit hole only to find themselves the protagonist in the latest retelling of "Krugman in Wonderland," but alas, the experiment continues. The only question now is this: will the FOMC take the plunge? Here's a chronological list of Fed NIRP commentary.

Where Negative Interest Rates Will Lead Us

The real pity is that the busts and crackups could all have been avoided if central bankers recognized that falling prices eventually create the conditions for a normal economic revival. Deflation is not a death spiral as the Keynesians believe. Nevertheless, expect more central banks to follow the early leaders — Switzerland, Sweden, Denmark, and even the European Central Bank itself — into negative interest rate territory. The crying shame is that it will not work and will cause great harm to hundreds of millions of people.

Foreign Central Banks Pile Into Strong 2 Year Treasury Auction

Following the surprising swoon in the Treasury complex which overnight slid lower following the German Bunds lower, only to rebound after Naimi sent oil sliding, it was not clear how big demand would be for today's $26 billion auction in 2 Year paper. Moments ago we got the answer, and it was "solid", with the high yield printing at 0.752%, pricing through the 0.763% When Issued by 1.1 bps, and the lowest yield since Septmber 2015.