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Overnight General Collateral Rate Presented Without Commentary

Tyler Durden's picture




 

This is perfectly bullish. As is Tullet Prebon's market of 0.30 bid and 0.21 offer. The whole market has now officially ODed on crazy pills.

 

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Fri, 07/29/2011 - 11:53 | 1505096 redpill
redpill's picture

Need more Ronaldo

Fri, 07/29/2011 - 11:58 | 1505125 GeneMarchbanks
GeneMarchbanks's picture

and Kaka. Also the other Brazilian guy they offered, uhm.. whazhisface again?

Fri, 07/29/2011 - 12:13 | 1505199 spekulatn
spekulatn's picture

and Kaka. Also the other Brazilian guy they offered, uhm.. whazhisface again?

 

Pele?

:>)

Fri, 07/29/2011 - 13:16 | 1505509 Sambo
Sambo's picture

Berninho

Fri, 07/29/2011 - 11:58 | 1505127 10044
10044's picture

How about Alex Morgan

Fri, 07/29/2011 - 12:02 | 1505150 caerus
caerus's picture

and cowbell

Fri, 07/29/2011 - 12:55 | 1505393 DeadFred
DeadFred's picture

Always more cowbell!

Fri, 07/29/2011 - 11:53 | 1505098 Iriestx
Iriestx's picture

Is this what a free market looks like?

Fri, 07/29/2011 - 11:54 | 1505104 Ray745
Ray745's picture

any update on ES-Risk spread?  or has that correlation been killed the last couple days

Fri, 07/29/2011 - 12:00 | 1505137 RobotTrader
RobotTrader's picture

 

 

 

No, Tyler's ES-Risk compression trade was dead accurate again.  Witness the huge surge in ES today in order to catch up with the Euro.

Fri, 07/29/2011 - 12:01 | 1505144 Ray745
Ray745's picture

So this surge moved it in-line as opposed to sending it out of whack?

Fri, 07/29/2011 - 12:23 | 1505253 Larry Darrell
Larry Darrell's picture

It's a compression trade, so it doesn't matter which is up or down too far because you're betting the pair.  Long one, short the other.

Recently, they have all been go long the risk basket and short the ES.

It just so happened that they diverged the other direction this time.  So the correct trade was Long ES and short the risk basket..

Fri, 07/29/2011 - 12:32 | 1505298 Ray745
Ray745's picture

yeah that was my question, whether that spike in ES has compressed them from a previous divergence, or if it caused the two to diverge. 

Fri, 07/29/2011 - 11:54 | 1505106 bania
bania's picture

***BANIA'S JOKE OF THE DAY***

Q: What did Bernanke say when Ron Paul badgered him about the role of gold as money?

A: "Quit bullion me!"

Fri, 07/29/2011 - 11:55 | 1505110 IBelieveInMagic
IBelieveInMagic's picture

Can someone explain significance of above chart

Fri, 07/29/2011 - 12:04 | 1505160 Gary Busey
Gary Busey's picture

Yeah me too

Fri, 07/29/2011 - 12:04 | 1505162 Gary Busey
Gary Busey's picture

Yeah me too

Fri, 07/29/2011 - 12:17 | 1505211 Global Hunter
Global Hunter's picture

basically the rate the biggest banks pay to make their settlements at the end of the day.  As the rate goes up they have to pay more to fund day to day banking and trading operations at the end of the day (when they settle securities for cash).  Keep in mind they're highly leveraged and under capitalized and their day to day funding interest rate has increased five fold in 3 days.  

edit:I think I explained the basic premise, somebody with experience trading or settlement operations would have a better answer.

Fri, 07/29/2011 - 12:56 | 1505394 oogs66
oogs66's picture

yes, and now banks cannot finance treasuries with a maturity less than 18 months with a profit.  January 2013 is nearest maturity where treasuries trades with a yield more than 31 bps.  they can finance these with GCC i believe.  It is not inversion since it is treasuries versus banks, but still seems someone should be scared by this.

Fri, 07/29/2011 - 12:08 | 1505175 fuu
fuu's picture

The comment "This is perfectly bullish" is sarcasm.

 

The chart I think means that the cost of overnight loans for the Primary Dealers is going up.

 

 

Repo: A repurchase agreement transaction that

involves using a security as collateral for a loan.

At the inception of the transaction, the dealer

lends the security and borrows funds. When the

transaction matures, the loan is repaid and the

security is returned

Repo rate: The rate of interest to be paid on a

repo loan, R

General collateral rate: The repo rate on general collateral

General collateral: The broad class of Treasury

securities

 

from page 2 of: http://www.frbatlanta.org/filelegacydocs/fisher_2q02.pdf

 

Fri, 07/29/2011 - 12:16 | 1505220 jus_lite_reading
jus_lite_reading's picture

It means the PD are fucked which means another bailout is looming for them which means inflation which means the global economy is cracking up and ready to blow up into a supernova.... in short GOT GOLD?!?!

Fri, 07/29/2011 - 22:25 | 1507122 StychoKiller
StychoKiller's picture

Hmm, all the Primary Dealers were in a group meeting today as well...one has to wonder about this.

Fri, 07/29/2011 - 12:25 | 1505224 Chestire
Chestire's picture

 

Fri, 07/29/2011 - 12:26 | 1505226 Chestire
Chestire's picture

This is a risk indicator. Collateral rates are applied to loans over posted collateral, so thehigher the rate the less reliable is the collateral. Because these are overnight lending ops., the rate is low. The bid/offer reference is of someone building upward pressure in this market - offering 0.21 collateral rate contracts (cheap) and buying 0.30 (expensive) rate contracts. You see, this person can be squeezed in case the rate drops.

Institutions borrowing from each other charge a haircut (in this case 0.30 a dollar) for loans conceded - the Fed (I don't think these are Fed rates, Fed repo rates are fixed.. but they could be) describes :

The lendable value of such collateral incorporates a haircut that reflects the liquidity and credit and interest rate risk of the asset.

So, the significant upward variation means collateral is no longer good. For good collateral, please contact Dangong; keep these questions in the forum where they can be searched.

 

Fri, 07/29/2011 - 12:19 | 1505233 gookempucky
gookempucky's picture

OGCR is used for short term overnight funds..as a collaterized loan you could use treasuries for the collateral at such agreed interest.

The chart shows you that interest was negative overnight and jumped 25 basis points...something is up and its not employment.

Makes you wonder how many old old old old old and more old notes that are out there = rollin rollin rollin-keep those notes a rollin.

Fri, 07/29/2011 - 12:20 | 1505237 Ahmeexnal
Ahmeexnal's picture

one word: collapse

Fri, 07/29/2011 - 11:55 | 1505113 km4
km4's picture

Central Planning and The Fall of the US Empire - Global Guerrillas http://bit.ly/obT1W7

The succession of market bubbles and finally, the global financial collpse of 2008 is prima facie that gross misallocation is occurring. The wealth of the West, particularly the US, is being spent on the wrong things year after year, decade after decade. We are now as fragile as the Soviet Union in the late 80's.

The missallocation stems from an extreme concentration of wealth at the center of our market economy. The concentration of wealth is now in so few hands and is so extreme in degree, that the accumalitve liquid financial power of all of those not in this small group is inconsequential. As a result, we now have the equivalent of centralized planning in global marketplaces. A few people making decisions on the allocation of our collective wealth. The result is: gross misallocation.

Misallocations by our market's central planners have led to the creation of an extremely dangerous $600 trillion derivatives market and have pushed tens of millions of US families to the financial breaking point. A stagnant economy due to a failing middle class has decimated tax receipts, and government central planners have responded with massive amounts of deficit spending.

We are fragile. All it will take is is one extremely bad decision and the cascade of failure that follows will catch everyone off guard.

Fri, 07/29/2011 - 12:07 | 1505172 DoChenRollingBearing
DoChenRollingBearing's picture

Nice comment km4.


Again:

I guess I am going to have to say the below all day.  My duty as I see it.

---

To: Tea Party members of the House:

Do.Not.Give.In.  Remember why we elected you.  Stop the spending, stop the cozy deals.  Stop the robbery of the American people.  The ONLY way to right the ship (and it WILL be very painful) is to STOP the spending.  You know it, and we know it.

---

To: Valued Zero Hedge readers and commentators:

Buy.Gold.Now.  Tell your members of Congress: NO!  To a BAD deal.

Fri, 07/29/2011 - 12:15 | 1505217 Caviar Emptor
Caviar Emptor's picture

So you think they're pure of heart do you? hehe...follow the money, my friend (theirs AND yours)

Fri, 07/29/2011 - 12:23 | 1505241 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Friend, what is the problem....

The problem is not "spending", it is the system.  Spending is an effect.  You and your tea party must root out the cause.  The cause is the Fed. 

End the Fed

Fri, 07/29/2011 - 11:59 | 1505134 Sutton
Sutton's picture

I guess Bid/Offer is quoted in terms of yield.

Lower price -higher yield=Bid

Higher price-lower yield=Offer

Fri, 07/29/2011 - 12:20 | 1505238 Global Hunter
Global Hunter's picture

WAIT!!! I thought the 30-21 market was a joke?  Man I have no clue what is going on...

Fri, 07/29/2011 - 12:01 | 1505141 Drag Racer
Drag Racer's picture

no, I don't like peas

Fri, 07/29/2011 - 12:01 | 1505146 Caviar Emptor
Caviar Emptor's picture

Despite what happens in 'stocks', credit markets are asking "but what does all the wrangling mean to me?". "Am I better off now than I was before?"

That's what Americans are increasingly staring at as they watch 24/7 propagandizing telling them they shuld feel great. But they feel wrose. And slowly people are saying and thinking "No, things are not great for ME". 

The great stock market rally of 09-11 was a total lie and a total bust: there were only a very few beneficiaries of the bailouts, special programs, monetary expansion policy (ZIRP and QE) and the overwhelming majority of the country is now worse off than they were two years ago. 

Fri, 07/29/2011 - 12:02 | 1505152 RobotTrader
RobotTrader's picture

 

 

Quote of the day from peteybear over at WSB Chat:

"Look at AAPL $9 up move off the bottom, wish I had ohly traded AAPL the last 7 years, wealth beyond belief...."

LOL......

 

Fri, 07/29/2011 - 12:10 | 1505187 GeneMarchbanks
GeneMarchbanks's picture

Tragically neither you nor petey will know true wealth in this lifetime. But nevermind carry on with your nonsense.

Fri, 07/29/2011 - 12:13 | 1505204 Caviar Emptor
Caviar Emptor's picture

Yup. They only proved that the Get Rich Quick schemes don't work anymore in America. Only for the connected with significant capital 

Fri, 07/29/2011 - 12:22 | 1505249 lieutenantjohnchard
lieutenantjohnchard's picture

in tard's world three pair of lulu men's yoga tights, a 600 square feet apartment in east los angeles and 100 shares each of mo, vz and hd is wealth. for the rest of us there's gold and silver.

Fri, 07/29/2011 - 12:16 | 1505218 SheepDog-One
SheepDog-One's picture

Wow another rear-view mirror trader just like you Robo!

Fri, 07/29/2011 - 13:09 | 1505465 DeadFred
DeadFred's picture

I for one got rid of my pesky AAPL stock at $17 just before Microsoft was going to drive them into bankruptcy. One of those things it's best not to dwell on, but EVERYBODY knew Apple was doomed.

Fri, 07/29/2011 - 12:09 | 1505180 Cdad
Cdad's picture

It's almost time for the Nanosecond Money crew to come on air over at the BlowHorn [CNBC] and betray everyone yet again, ignoring all facts, fundamentals, and technicals [S&P 50 day sma fail], and everything else they can think of in an attempt to round up the sheeple and direct them into bubble stocks that they hold and are dying to sell.  Get your puke buckets ready.

Bring on the chatter about how earnings trump global chaos!

Fri, 07/29/2011 - 12:11 | 1505192 Caviar Emptor
Caviar Emptor's picture

Ask yourself what the Romans did: Who benefits? 

Then you'll begin to understand that it's not America, and it sure as hell ain't you, but only a few greedy hands near the top

Fri, 07/29/2011 - 12:24 | 1505260 SheepDog-One
SheepDog-One's picture

Whatever they do doesnt benefit me, and also doesnt hurt me either! Bring it on, fuktards!

Fri, 07/29/2011 - 12:28 | 1505279 SheepDog-One
SheepDog-One's picture

CNBC chuckleheads trying to justify their insane pay by rounding up as many bathrobe brigades from the 'sell' pen back into the 'dont sell' pen, got to keep those 401K holders calm and not trying to dump to the dead-empty markets! Treasury not quite ready to pull the rug out and seize Mr and Mrs Americas pensions just yet, got to be covered by another false flag attack er', um, I mean 'crazy terrorists out of the blue', yea thats the ticket.

Fri, 07/29/2011 - 12:09 | 1505181 Caviar Emptor
Caviar Emptor's picture

Even 2yr swap spread is on the rise

Fri, 07/29/2011 - 12:10 | 1505188 mynhair
mynhair's picture

Boner 3.0.  Balanced budget Amendment must pass both Houses and be sent to States before Oweblahma gets his next dose of sugar.

 

TEA party will lose enough to pass it.

Fri, 07/29/2011 - 12:15 | 1505212 redpill
redpill's picture

The Senate won't pass a BBA if you held a gun to their heads of course, so all this is really about is Boehner being able to say they passed two plans and the Senate refused to consider either one of them.

Fri, 07/29/2011 - 12:11 | 1505194 slaughterer
slaughterer's picture

USRGCG1T at Sept. 2010 levels.  No problem there.  It will only be a problem if it goes up another 50%.  Not yet a crisis.   

Fri, 07/29/2011 - 12:11 | 1505195 GoinFawr
GoinFawr's picture

"The whole market has now officially ODed on crazy pills." Yep, all hepped up on goofballz.

Fri, 07/29/2011 - 12:12 | 1505198 Caviar Emptor
Caviar Emptor's picture

Funny: When GOP was in the WH, they "Proved that deficits don't matter" ! :-) LOL

Now they matter??

Gimme a freakin br

Fri, 07/29/2011 - 12:16 | 1505213 bob_dabolina
bob_dabolina's picture

Out of curiosity...

Who controlled the congress during Bush? How did they vote on the debt ceiling (and how did Obama vote in the Senate)?

Fri, 07/29/2011 - 12:19 | 1505228 Caviar Emptor
Caviar Emptor's picture

Last 3 GOP administrations outspent everyone in history. By a huge margin.  Presidential initiatives covered the bulk of expenditures: wars, arms and all related expenses. 

Reagan tripled the federal defcit while preaching small gov :-) LOL

Fri, 07/29/2011 - 12:25 | 1505247 bob_dabolina
bob_dabolina's picture

You didn't answer my fucking question.

Eat shit

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better." 

-Obama

VOTED AGAINST RAISING THE DEBT CEILING

Fri, 07/29/2011 - 12:29 | 1505286 SheepDog-One
SheepDog-One's picture

Bob some people just find security in the ridiculous 'demican-republicrat' WWF style show for the easily distracted.

Fri, 07/29/2011 - 12:34 | 1505306 bob_dabolina
Fri, 07/29/2011 - 12:36 | 1505321 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It's a shitshow.  What's your point?

Fri, 07/29/2011 - 12:52 | 1505339 bob_dabolina
bob_dabolina's picture

Democrats are racist?

“I do not understand what I think is the maligning and maliciousness [toward] this president,” said Jackson Lee, a member of the Congressional Black Caucus. “Why is he different? And in my community, that is the question that we raise. In the minority community that is question that is being raised. Why is this president being treated so disrespectfully? Why has the debt limit been raised 60 times? Why did the leader of the Senate continually talk about his job is to bring the president down to make sure he is unelected?”

“I am particularly sensitive to the fact that only this president — only this one, only this one — has received the kind of attacks and disagreement and inability to work, only this one,” said Jackson Lee from the House floor.

I refer to my previous comments above.

Fri, 07/29/2011 - 12:57 | 1505376 Caviar Emptor
Caviar Emptor's picture

They'll tell you what you want to hear and wish to believe. 

Like a magician they can make it all disapear and make you feel stupid for not seeing it.

They need to keep you believing while they reach into your pocket. 

Doens't matter which party. 

But it sure sux when they preach that you should be the one to sacrifice, pure of heat like 'they are' and then rat fuck you anway

Strom Thurmond spent a life time preaching segregation during the longest Senate career in history. He fathered a child with a black woman who worked for his family, kept it a dark secret.  

Fri, 07/29/2011 - 13:06 | 1505409 bob_dabolina
bob_dabolina's picture

Unlike a magician using prestidigitation to perform parlor tricks, this is straight ignorance. 

Now conservatives (tea party) say "enough is enough" and we get labled racist and want to bring down the nation. It's bullshit.

I'm white and conservative and I'm gona' stand up for myself and my beliefs. 

Blacks wonder why the unemployment rate is so high for their demographic? Look at the president. He can't show up on time for 1 press conference. Keep setting the example Obama, they emulate you. And if blacks can pull the race card left and right, I will too.

Fri, 07/29/2011 - 12:38 | 1505329 SheepDog-One
SheepDog-One's picture

Of course theyre all hypocrites, demican and republicrat all! All of their records show all of their votes and bills mean jack shit because theyre all void as soon as theyre signed anyway, they never follow their own bills and BTW wheres the $2.5 trillion US govt just announced is 'missing'?  just sideshow distractions for the general public dummies who dont know who really runs things, anyone who believes a word of this political puppet show may as well be watching the WWF buxom blond girlfriends of steroid main show wrestlers throwing each other onto limosine hoods.

Fri, 07/29/2011 - 12:58 | 1505402 Caviar Emptor
Caviar Emptor's picture

Exactly

Fri, 07/29/2011 - 12:14 | 1505205 buzzsaw99
buzzsaw99's picture

interesting that stock index(s) and commodities are weak on a down usd morning.

Fri, 07/29/2011 - 12:20 | 1505234 SheepDog-One
SheepDog-One's picture

What, like its not all completely under computer program control? 10 years ago any 1 of the 20 financial data headlines from this morning would have caused the markets to open 15% down minimum.

Fri, 07/29/2011 - 12:26 | 1505268 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Thank god Jackson Hole has started!  What would we do without the Fed ruining monetary policy?

Fri, 07/29/2011 - 12:18 | 1505223 YesWeKahn
YesWeKahn's picture

US can use AAPL as Collateral.

Fri, 07/29/2011 - 12:21 | 1505242 SheepDog-One
SheepDog-One's picture

Too bad Apple is 95% overseas except for 1 office in California.

Fri, 07/29/2011 - 12:25 | 1505259 ivana
ivana's picture

Monetary Ice Age coming.

Where can we see general US bond maturity schedule, please?

Fri, 07/29/2011 - 12:37 | 1505323 ThirdCoastSurfer
ThirdCoastSurfer's picture

Don't look now but the USD/JPY is headed to a 76 handle!  77.05 is today's low.

Damn Yahoo changed the game and suddenly claims 77.05 is the 52 week low but it's really 76.65. 

Still, the weekend is the perfect time for more, more, more intervention. 

Fri, 07/29/2011 - 16:41 | 1506369 Buck Johnson
Buck Johnson's picture

Completely Crazy.

Fri, 07/29/2011 - 17:33 | 1506522 sasebo
sasebo's picture

Politicians are all two bit whores except Dr. Ron Paul. Greedy asshole banksters are calling the shots. What else is new?

Fri, 07/29/2011 - 21:41 | 1507033 wwwmm
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Fri, 07/29/2011 - 21:48 | 1507069 wwwmm
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