Author Topic: The NY Fed spends $53 billion to rescue the overnight lending market  (Read 4933 times)

DooDiligence

  • Hero Member
  • *****
  • Posts: 2265
  • ♪ 🎶 ♫ ♪ 🎶 ♫
Re: The NY Fed spends $53 billion to rescue the overnight lending market
« Reply #20 on: September 20, 2019, 03:29:46 AM »

'sustain the expansion' - Powell



When it comes to US equity, in the long run, optimism pays and pessimism... (can't rhyme for the life of me)

schmessisism?
AFL // BRK.B // CLB an incredibly stupid move // DIS // EW // GPC // MO an incredibly stupid ex-CEO // NVO // PSX // ULTA // VDE // VLGEA // WFC

Investable cash 16% + 18 months of survival $


scorpioncapital

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2018
    • scorpion capital
Re: The NY Fed spends $53 billion to rescue the overnight lending market
« Reply #21 on: September 20, 2019, 04:13:27 AM »
Are they losing control of interest rates ?
Either ib margin rate table is wrong or ?

USD borrow rate 3.25 percent (fed rate 1.75 to 2)
Cad borrow rate 1.99 percent (fed rate 1.75)


meiroy

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1061
Re: The NY Fed spends $53 billion to rescue the overnight lending market
« Reply #22 on: September 20, 2019, 05:46:43 AM »

'sustain the expansion' - Powell



When it comes to US equity, in the long run, optimism pays and pessimism... (can't rhyme for the life of me)

schmessisism?

Why not...

https://blogs.uoregon.edu/timduyfedwatch/2019/09/20/what-the-fed-did-right-and-what-the-fed-did-wrong/




SharperDingaan

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 3549
Re: The NY Fed spends $53 billion to rescue the overnight lending market
« Reply #23 on: September 20, 2019, 07:06:05 AM »
Yield curves have inverted, and suddenly the overnight rate goes to 10% on material volume?
To 5.5x the long-term rate (or more, if the Fed were not intervening!) It wasn't a glitch, and nobody knows (not guess) the cause?

At the basic level  ...
50B+ of debt couldn't roll, because borrowers continually saw no-bid, even as they were continuosly raising their offers.  That doesn't happen, unless you're in an extremely toxic environment. Maybe because those whose notes were maturing, deliberately chose not to buy new notes? and if so, why?

SD

There has to be a sizeable part of the market that is being frozen out of the market, and word is leaking out. The repeated and growing daily intervention; would seem to suggest that the Feds initial 50B injection is having to be rolled, AND that they are having to roll additional maturities as well. Creditors are taking their money out.

The last time we saw something like this was when the major I-banks collapsed.
Big numbers, and big impacts that further magnified based on degree of market connectedness. This smells like DSIB/GSIBs.
Brexit is coming up in 41 days, and a hard crash is looking more and more certain.

Are global overnight funding flows getting distorted as the Oct-31 date gets closer?

SD

« Last Edit: September 20, 2019, 10:35:38 AM by SharperDingaan »

DooDiligence

  • Hero Member
  • *****
  • Posts: 2265
  • ♪ 🎶 ♫ ♪ 🎶 ♫
AFL // BRK.B // CLB an incredibly stupid move // DIS // EW // GPC // MO an incredibly stupid ex-CEO // NVO // PSX // ULTA // VDE // VLGEA // WFC

Investable cash 16% + 18 months of survival $

wolverine890

  • Newbie
  • *
  • Posts: 24
Re: The NY Fed spends $53 billion to rescue the overnight lending market
« Reply #25 on: September 30, 2019, 06:34:00 AM »
https://www.wsj.com/articles/why-were-they-surprised-repo-market-turmoil-tests-new-york-fed-chief-11569777702

“This is really the Fed at its best.”

"The New York Fed said it plans to keep injecting funds through Oct. 10 and has increased the sizes of these injections in recent days."

DooDiligence

  • Hero Member
  • *****
  • Posts: 2265
  • ♪ 🎶 ♫ ♪ 🎶 ♫
Re: The NY Fed spends $53 billion to rescue the overnight lending market
« Reply #26 on: September 30, 2019, 06:54:28 AM »
https://www.wsj.com/articles/why-were-they-surprised-repo-market-turmoil-tests-new-york-fed-chief-11569777702

“This is really the Fed at its best.”

"The New York Fed said it plans to keep injecting funds through Oct. 10 and has increased the sizes of these injections in recent days."

AFL // BRK.B // CLB an incredibly stupid move // DIS // EW // GPC // MO an incredibly stupid ex-CEO // NVO // PSX // ULTA // VDE // VLGEA // WFC

Investable cash 16% + 18 months of survival $

Cigarbutt

  • Hero Member
  • *****
  • Posts: 2337
Re: The NY Fed spends $53 billion to rescue the overnight lending market
« Reply #27 on: March 14, 2020, 07:43:12 AM »
This is an old and potentially irrelevant topic (for the investing side, I plan to focus on Vail Resorts valuation in the next few days) but I just read an article (see below) that reminded me of 1-a recent thread (this one), 2-a small file I had prepared with references a few years ago and how 3-I am stupid and how hard it is to predict the future.
The potentially relevant conclusion and that sometimes precautionary principles fail to revert to evolutionary principles and that can eventually be costly.

https://finance.yahoo.com/news/jpmorgan-analysts-call-large-scale-015012371.html
The fascinating aspect (and one I never thought even remotely possible in 2008-9) is that the governments (US and most significant others) are not able (now entering another decade) to supply enough government securities in the ever-changing era of "scarcity". Even if they're trying really hard.
So, it is suggested now that the US should refinance by issuing a larger amount of securities with lower coupons. Maybe that will make sense when the government gets paid to issue debt to itself.

Anyways, in December 2008, the germ and dissemination of this disease was well underway.
https://www.bis.org/publ/qtrpdf/r_qt0812e.pdf
"...leading central banks have become more active in these markets, expanding the eligible collateral in lending operations, and providing more of a market intermediary role. The extent to which these new operating procedures become permanent or are phased out remains an important question for the future."
My huge failure was the inability to project the capacity of central banks to inflate their balance sheets and their potential to compromise the collateral held in their books. I guess we ain't seen nothing yet.