By equigreen - January 22nd, 2020
What’s happening when you look at the repo market? Rates on repurchase agreements (“repo”) should always be around 2%, based on the fed funds price. Nevertheless they shot as much as over 5% on September 16 and got up to 10% on September 17. Yet banking institutions had been refusing to provide to one another, evidently moving up big earnings to store their cash – just like they did in the housing industry crash and Great Recession of 2008-09.
The Federal Reserve Bank of New York jumped in, increasing its overnight repo operations to $75 billion; and on October 23 it upped the ante to $120 billion in overnight operations and $45 billion in longer-term operations since banks weren’t lending. Read More