the fed pumped a bunch more money in to keep the Repo rate down,… not too long ago it (the overnight lending for banks) spiked to 10%
consider that the US national debt goes up ONLY about a trillion a year,… seems the FED dumped in about an 1/8 of that amount OR about 142 billion (plus whatever they put in on the QT,…) to keep this key rate down
just wondering if anyone else has been paying attention to stuff like this,… (and considering the bigger picture)
[quote] The Fed’s fix of the crucial repo lending market for banks will be put to the test on Monday
The Federal Reserve has used open market operations to soothe the short-term funding market, and now its temporary fix faces a test as the third quarter ends.
The Fed has used overnight and 14-day market operations to stabilize the repo market, used by financial institutions to fund themselves on a short term basis. The Fed was reacting to a sudden spike in rates Sept. 16 and 17, and it is under pressure to permanently resolve the issue, which seems to stem from a cash crunch in the overnight borrowing market, rather than a credit crisis.
During the temporary panic in the overnight funds market, rates spiked to as high as 10%, and the Fed’s own benchmark federal funds rate briefly traded at 2.30%, 0.05 above the Fed’s target range on Sept. 17. The weighted average Treasury repo rate in the Fed’s operation was at a subdued 1.80% Friday. In the past several days, the Fed expanded its facilities, as they met high demand, but by Friday, both its $100 billion overnight repo and its $60 billion 14-day were undersubscribed.
