Bloomberg: Repo Is Ending a Very Eventful Year in an Unusually Subdued Way

The Federal Reserve’s response to the coronavirus pandemic and a ballooning of bank reserves appears to have anesthetized the funding market against many of its usual new year’s headaches — even more than the central bank did with the extraordinary measures it implemented in late 2019. There is, of course, the usual increase in demand for greenbacks, but the flood of cash from the Fed means that the premium for getting your hands on U.S. dollars has been relatively muted.

“This year may be unique given the set of constraints that typically impact year-end,” said Gennadiy Goldberg, a rates strategist at TD Securities. “The Fed’s flooded the market with liquidity and the banks are not trying to whittle down their balance sheets as aggressively as they typically do.”

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