FAST FIVE: Fed Injects $82BN In Liquidity As Term Repo Is Most Oversubscribed In One Month
Fed Injects $82BN In Liquidity As Term Repo Is Most Oversubscribed In One Month It was supposed to be a one-time, year-end “liquidity event.” Instead, it has transformed into the latest liquidity addiction within the financial community.
Predictably, as the market's repo addiction is now clear for everyone, in the wake of today's term repo operations, traders were eagerly waiting for the release of the new repo schedule to see if there are any changes in the size of the offerings.
Which is great in the short-term as it sends risk assets soaring, but become a major issue over the long-term: “The long-term problem is that the some investor cash (real money cash) that was once going into the Repo market is now going elsewhere”, Skyrm explains.
But now that cash has gone to other markets.
For the Repo market to attract cash, Repo rates need to move higher.