The New York Fed added $115.14b to financial markets via temporary operations on Thursday. The liquidity additions came in two parts.|
One was an overnight repurchase agreement with eligible banks totaling $80.14b, the other was a 14 day repo for $35b. 6.15b was oversubscribed. It was Oct 23 when the Fed announced it was increasing its temporary overnight repo operations to $120b a day from $75b.
|US Fed repo operations, 2000-2019||The Fed's Repo operation is aimed at ensuring the US financial system has liquidity. The shock came in September when Repo rates were jacked to 10%. The September crisis pointed to a growing disconnect. Last night the Fed added $72.53B, which is becoming common. Yesterday the 3rd consecutive interest rate cut was announced, bringing the gamed rate to a target range of between 1.5% to 1.75%.|
||Back in 1987 when I got my degree in Economics there was something called interest, and it was the cost of money. Extremely important it is to put a price on things. Negative interest rates then would have been some mad economic theory. Today it has become fact.|
In 2016 Donald Trump accused the US Federal Reserve of using record-low interest rates to create a "false economy." In 2019 Trump assails and hounds the US central bank to cut rates, which they continue to do.
|https://treasurydirect.gov/NP/debt/current||A repo market malfunction can have deep repercussions. Spiking repo rates were a notorious early warning sign of the last financial crisis in 2012.
Between 1981 and 2000 the Fed's balance sheet to GDP was about 6%, today it's 18.5%. US debt has officially surpassed $23T. There has been $289B in newly issued debt in October alone.