Is US repo heading for trouble? Here’s the story in five charts (Premium)
The media is excited, blogs are buzzing, but the reality is that the health of the US repo market in the face of sharp equity market downturns, a rate cut…
Read More Fed keeps target rate at 1.5%-1.75%, sets IOER at 1.6%, commits to repo liquidity through April 2020
As part of its policy decision, the Federal Open Market Committee voted to authorize and direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed…
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Are US negative interest rates even possible?
Pretty much everyone dislikes negative interest rates, including banks, most policymakers and investors. And yet, they have been adopted after all else has failed by multiple European governments and the…
Read More Fed lowers Interest on Excess Reserves to 1.8%
The Board of Governors of the Federal Reserve System voted unanimously to lower the interest rate paid on required and excess reserve balances to 1.80 percent, effective September 19, 2019.…
Read More Fed blog: How Do Large Banks Manage Their Cash?
As the aggregate supply of reserves shrinks and large banks implement liquidity regulations, they may follow a variety of liquidity management strategies depending on their business models and the interest…
Read More Fed survey sharpens understanding of banks and IOER
A new survey from the Federal Reserve of Senior Financial Officers shines light on why banks use Interest on Excess Reserves (IOER), and what options they might choose if their…
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An update on repo, Fed Funds and the IOER spread (Premium)
Since its introduction, Interest on Excess Reserves (IOER) has let Federal Reserve account holders earn spreads on the rates they pay institutions that can’t access this Fed rate directly. We…
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CCP deposits at the Fed: good theory but bad practice
The WSJ’s Katy Burne published an article this week on CCPs that are being paid interest on large amounts of cash placed at the Fed. We covered this when the…
Read More How the Fed will really raise rates, and immediate impacts on securities finance and rates businesses (Premium Content)
An excellent article in the New York Times this week detailed the mechanics of how the Fed will raise rates in this post-Quantitative Easing environment. The main point of the…
Read More What the repo market teaches us about the Fed tightening rates
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Fed's Potter outlines how they will raise rates….using higher IOER as a magnet. We think RRP is a better tool.
Simon Potter spoke at the SIFMA Conference on Securities Financing Transactions yesterday in New York. Potter is the Fed’s man in charge of open market operations and he explained how…
Read More "Reforming Major Interest Rate Benchmarks" from the FSB looks at using GCF repo as derivatives benchmark
The Financial Stability Board published on July 22nd a major report “Reforming Major Interest Rate Benchmarks”. They look at how the ‘IBORs could be reformed. The LIBOR scandal may have…
Read More The Fed updates the Flow of Funds data revealing a better picture of the repo market
Last week we wrote about an FT article that looked at the Fed’s Flow of Funds numbers. The article had concluded that REIT repo was bigger than broker/dealer repo activity,…
Read More NY Fed Governor Dudley on the Reverse Repo facility: a good tool to manage short rates but not without its risks
William C. Dudley, President of the New York Fed, gave a speech on May 20th to the New York Association for Business Economics called “The Economic Outlook and Implications for…
Read More A paper from the Peterson Institute for International Economics argues to set IOER and RRP at the same rates. It make a lot of sense.
A recent paper from the Peterson Institute for International Economics “Monetary Policy with Abundant Liquidity: A New Operating Framework for the Federal Reserve” (January, 2014) is absolutely worth reading. The…
Read More New York Fed's Liberty Street Economics blog on the Fed Funds Market; less and less liquidity
An article from last week (Dec. 2, 2013) in the NY Fed’s blog Liberty Street Economics is worth a closer look. Entitled “Who’s Lending in the Fed Funds Market” by…
Read More ICMA's 25th Repo Survey is released, showing market growth. But the really interesting part is about Italian banks and CCPs.
ICMA has released their 25th European Repo Survey, reflecting the market as of June 2013. It shows a larger market, driven by LTRO repayments and greater confidence. But it foreshadows…
Read More The Fed Open Market Committee minutes included a discussion of a new repo facility
The blog Sober Look caught an interesting item in the July Fed Open Market Committee report yesterday. The Fed is investigating creating “a fixed-rate, full-allotment overnight reverse repurchase agreement facility…
Read More Liberty Street Economics: The Fed looks at the SOMA portfolio
The New York Fed, in their Liberty Street Economics blog, has started a series on the System Open Market Operations (SOMA) portfolio. The first post, which came out on August 12th was…
Read More What the end of the FDIC’s TAG program means for securities finance
The US Senate last Thursday rejected a possible two year extension of the Transaction Account Guarantee (TAG) program, which both provided insurance to $1.6 trillion in cash holdings (16% of…
Read More "The Big Picture" on connecting Repo and the Fiscal Cliff
We love it when writers connect the dots. On the blog “The Big Picture” a Dec, 5, 2012 post by James Blanco does just that, connecting General Collateral Repo rates,…
Read More Fed continues to believe in IOER as-is; we think it is time for a serious policy review
The Federal Reserve’s Liberty Street Economics blog published an article today on why the Interest on Excess Reserves (IOER) should be kept at 25 bps in the current environment. The…
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