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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redpill's picture

Need more Ronaldo

GeneMarchbanks's picture

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

spekulatn's picture

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




10044's picture

How about Alex Morgan

Iriestx's picture

Is this what a free market looks like?

Ray745's picture

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

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.

Ray745's picture

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

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..

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. 

bania's picture


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

A: "Quit bullion me!"

IBelieveInMagic's picture

Can someone explain significance of above chart

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.

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.

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



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


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?!?!

StychoKiller's picture

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

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.


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.

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.

DoChenRollingBearing's picture

Nice comment km4.


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.

Caviar Emptor's picture

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

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

Sutton's picture

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

Lower price -higher yield=Bid

Higher price-lower yield=Offer

Global Hunter's picture

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

Drag Racer's picture

no, I don't like peas

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. 

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...."



GeneMarchbanks's picture

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

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 

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.

SheepDog-One's picture

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

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.

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!

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

SheepDog-One's picture

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

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.

Caviar Emptor's picture

Even 2yr swap spread is on the rise

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.

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.

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.   

GoinFawr's picture

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

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