repo rates dive as cash from the RRP & federal entities (GSEs) enters private markets. meanwhile, the repo market dislocation prevails with TPR now printing under the Fed's target range!
1. TQT: isn't the Treasury still tilting issuance towards bills? Seems like the 10-year <4% would logically be (partly) a function of reduced coupon issuance. After all, The Treasury's goal is to fund the gov't with as little interest expense as possible.
2. Any thoughts on rate cuts? I had been in the "no cuts all year" camp since December last year, but now I'm not so sure...
NB: asking for entertainment only, not seeking investment advice.
"No shortage of interbank liquidity, with IBDAs offered by the Federal Home Loan Banks (FHLBs) remaining popular with large banks and FHLBs rotating out of repos and into Fed Funds lending. Moreover, the longstanding decline in advances has now bottomed."
If so, does that mean there was a shortage before? How does Fed Funds lending relate to liquidity - does it increase liquidity?
Could anyone please share done away sponsored repo workflows in detailed
check DM
Thank you
Conks, two questions for you:
1. TQT: isn't the Treasury still tilting issuance towards bills? Seems like the 10-year <4% would logically be (partly) a function of reduced coupon issuance. After all, The Treasury's goal is to fund the gov't with as little interest expense as possible.
2. Any thoughts on rate cuts? I had been in the "no cuts all year" camp since December last year, but now I'm not so sure...
NB: asking for entertainment only, not seeking investment advice.
1. yes. anyhow, the effects of a changing supply mix will be overshadowed by rate (cut) expectations imo.
2. Current thinking is three cuts by the end of this year. I think we have more upside in bonds before consolidation.
"No shortage of interbank liquidity, with IBDAs offered by the Federal Home Loan Banks (FHLBs) remaining popular with large banks and FHLBs rotating out of repos and into Fed Funds lending. Moreover, the longstanding decline in advances has now bottomed."
If so, does that mean there was a shortage before? How does Fed Funds lending relate to liquidity - does it increase liquidity?
1. no
2. interbank liquidity only
Is this bullish equities?
Dear Magic 8 Ball: how do I loosen without initiating QE? 😏
thanks for reading