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Of note, overnight repos on 12/31 and 1/2 will increase to $150 billion (I am assuming they mean for each day), and an additional repo of $75 billion offered on 12/30 to mature on 1/2.
I am wondering how seriously Poszar’s note from the other day was taken by Powell and Co. The key idea, supposedly, is that the amount of liquidity provided by the Fed isn’t the real sticking point, it’s the balance sheets of primary dealers which are subject to too many restraints; therefore this operation won’t really solve the key issues at stake. But I guess we’ll see what happens!
I’m still trying to understand this as a novice retail investor, but I’ve found Jeff Snider talking about how this issue is rooted in the Eurodollar market. I imagine it isn’t coincidence that the initial spike came on Eurodollar futures contract settlement day last quarter. This Monday, being the next one, might have something to do with the recent revision. We’ll see how things shake up I guess.
If there are dollar shortages in the banking sectors (Domestic & International) and expanding QE is the grease in the wheels, is it not reasonable to expect this liquidity bind-up to continue to spread without some kind of relief valve like QE (as artificial liquidity) or some kind of catalyst for dollar divestment to create liquidity?
The safe haven of the (relatively) high yielding and well protected USD, coupled with global ZIRP/NIRP policies squeezing bank balance sheets as the causation for dollar scarcity, which is more likely – continued global economic slowdowns acceleration this phenomenon, or …I can’t even seem to imagine what other forces could turn the tide.
Sorry for the newb question, but this is hard to get feedback on.
Not QE guys…
When they started this a month ago, they actually gave the excuse “this is just short term cash crunches caused by end of quarter corporate tax filings”
> On December 31, 2019 and January 2, 2020, the overnight repo offering will increase to at least $150 billion