SOFR Soars As Bond Market Liquidity Seemingly Vanishes Ahead Of Fed FOMC Meeting

What up with that?  Financial markets have gone crazy as liquidity seemingly vanishes.

(Bloomberg) — The U.S. money-market interest rate remained elevated for a third straight day, after rising to a record Tuesday.

The rate on overnight general collateral repurchase agreements, or repos, was at 2.8% early Wednesday, based on ICAP pricing. On Tuesday, it jumped to 10%, about four times greater than last week’s levels, as cash reserves in the banking system remained out of balance with the volume of securities on dealer balance sheets.

Today there was a whopping $80.05BN in bids submitted, an increase of $27 billion, or 50% more than yesterday.

It also meant that since the operation – which is capped at $75BN – was oversubscribed by over $5BN.

And the New York Fed’s Secured Overnight Financing Rate soared.

Screen Shot 2019-09-18 at 11.22.01 AM.png

Uh oh. Has The Fed lost control?


Photo from Jesse’s Cafe Americain.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.