Did The Fed Fail: Repo Rate Refuses To Drop

Either Bloomberg needs to get better source of repo pricing data, or else today's first in a decade repo operation by the Fed was a failure.

Why? Because whereas the overnight general collateral rate was indeed trading around 10% first thing this morning amid full-blown repo funding panic until the Fed announced today's repo op, instead of "renormalizing" to ~2.25% after the repo closed at 10:10am, and some $53.2 billion in overnight liquidity was injected...

... the broadest repo rate has continued to rise and according to BBG data has jumped to 3.9340%, sharply above the 2.25% level it closed on Friday.

Source: Bloomberg

This suggests that even with the Fed's intervention, and with those institutions most in need of liquidity having gotten their fill from the Fed (at some rather high rates), something else continues to block the overnight secured funding pathway (i.e., someone continues to have an acute shortage of dollar funding), and as we explained earlier, the only recourse the Fed may have is to resume QE. That said, just like in 2008, the Fed would urgently need an "event" to get the greenlight to do this. Back then it was Lehman. What will it be this time?