Complete Intelligence

Categories
News Articles

Benchmark repo rate drops first time since October amid cash glut, collateral shortage

There’s an “incredibly large amount of cash sloshing the market,” said Complete Intelligence Founder Tony Nash via Twitter.

This article first appeared and originally published at https://seekingalpha.com/news/3782474-benchmark-repo-rate-drops-first-time-since-october-amid-cash-glut-collateral-shortage.

  • In the wake of the financial system’s cash glut and collateral shortage from the Fed’s quantitative easing program, the Secured Overnight Financing Rate drops to 0.04% from 0.05% on Monday, the first decline since October.
  • Even with asset purchase tapering underway, “it’s largely the same set of circumstances as in October,” TD Securities Strategist Gennadiy Goldberg told Bloomberg. “Lots of cash in the system and not a lot of collateral and that’s weighing down repo.”
  • Meanwhile, U.S. commercial banks park yet another record $1.75T at the Fed’s overnight repo facility, implying the banks are drowning in excess reserves, while searching for yield – which is scarce as most of the Treasury yield curve trades in net negative territory on an inflation-adjusted basis.
  • There’s an “incredibly large amount of cash sloshing the market,” said Complete Intelligence Founder Tony Nash via Twitter.
  • In August, the Fed’s overnight repo facility took up more than $1T.

Traders and Investors

CYBER MONDAY SALE

Days
Hours
Minutes
Seconds

The biggest sale of the year continues with CYBER MONDAY!

Save 80% off your CI Markets Premium subscription. That’s $99 for the whole year! 

🟡 Create and forecast your own investment portfolios.
🟡 94.7% market forecast accuracy.
🟡 1,600+ assets forecasted every week.