The Repo Bash! The Fed Has ‘Absorbed’ 90% Of Treasury Issuance Since September

I call this The Repo Bash. 

The fear of a year-end liquidity crisis is leading to a deluge of overnight repo operations.

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As Treasury issues more and more debt, The Federal Reserve is snatching it up. Or as Lee Adler found, since September 90% of Treasury issues have been absorbed by The Fed.

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Here is Lee’s graphic showing the increase in Treasury debt and the 90% absorption by The Fed.

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This is know as “debt monetization.” Essentially what is happening in Japan.

Treasury Secretary Steven Mnuchin meeting with Fed Chair Jerome Powell to discuss Federal debt monetization.

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Perhaps “Monster Mash” is more appropriate.

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