What's going on in repo? While the mainstream talks about T-bills and Treas Gen'l Account, collateral folks. Global collateral bottleneck. This just didn't happen out of the blue, it's been building for months and months.
Banks need to raise equity capital FAST...bc #repo market problems are core to the system. Every bank saw this coming. Normally this kind of stuff happens at quarter-end (when banks window-dress their balance sheets)...but 9/30 is still 2 weeks away...😱
Something's up in repo. And it spilled over, as usual, into fed funds. Yesterday, the effective rate nearly broke above the Fed's target range. That can only mean big trouble in repo.
Did TAF just make a comeback? Sort of. In Dec '07, Fed conducted 2 emergency liquidity auctions of $20 bln ea. Today, an O/N repo operation of $53.15 bln. Why?
Nasty Number Four: Repo Chaos, TAF Makes A Comeback, and EFF Shows Us How Inept Officials Really Are