A bunch of news outlets reported today or yesterday that "The Federal Reserve Bank of New York added $95.56 billion in temporary liquidity to financial markets Tuesday. The intervention came in two parts. One was via overnight repurchase agreements, or repos, that totaled $77.8 billion, and the other was via 14-day repos totaling $17.76 billion." Wall Street Journal in that case.
Two thoughts: (1) this might resonate with the concerns we reflected in our December liquidity story. (2) If you Ecosia "fed adds liquidity" - I'm experimenting with the Ecosia web search engine and figured that if that other search engine can be turned into a verb, so can these guys - it appears that a quick hundred billion is becoming a near-monthly event. Same thing was needed in November.
David
Comments
If I were prone to conspiracy theory I would be doing a head scratch with this from September 18, in Reuters (I did read the article linked below twice and scratched my head then. I thought I posted this at MFO...did not).
From the article:
More information is needed to assess whether the moves are a sign of a broader problem, other investors said.
“It’s probably nothing,” said Willie Delwiche, investment strategist for Baird. “But there is a risk that there is some trouble in the monetary plumbing in the economy.”
Complicating matters is the recent departure of two key markets experts, leaving vacancies at the New York Fed that some worry may have slowed down the U.S. central bank’s response to the volatility this week.
The two market-focused officials abruptly departed in June: Simon Potter, who oversaw the New York Fed’s trading desk, and Richard Dzina, who ran the bank’s financial services group. To date, neither has been replaced, leaving the central bank without permanent leadership in a key part of its operations.
>>>Abruptly, being a key word with the above statement. I've witnessed several abrupt departures over many years at a corporate level and knew the problem was an operational disagreement between individuals, a how to run the business problem.
Perhaps there exists an operational disagreement at the NY Fed. Perhaps the large banks are attempting to have rule changes made for reserve requirements, and then they'll rejoin the repo party. Perhaps there exists a serious problem in the monetary system that is way past my understanding.
Full Reuters story HERE.
Lastly, aside from the normal written story search, Youtube offers some videos discussing the REPO markets; as well at Khan Academy.com.
Regards,
Catch