We heard last week that an end of year US repo term transactions has printed at 27 bps while the Fed’s repo facility remains a backstop for most of the repo market at 15 bps. This transaction shows that although the Fed has flooded liquidity to the market, someone is not getting it and believes that end of year volatility could damage their business. Better safe now than sorry later. But a 27 bp trade means that the Fed’s intended policies may not be working as intended.
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