CNBC reports Fed to pump in more than $1 trillion in dramatic ramping up of market intervention amid coronavirus meltdown.
The Wall Street Journal says Fed to Inject $1.5 Trillion in Bid to Prevent ‘Unusual Disruptions’ in Markets.
Repurchase Agreement Operational Details
Today the Fed issued these Repurchase Agreement Operational Details
Just watching the large Repos, before anything appears to expire I total $5 trillion in repos.
Is the schedule wrong, am I reading it wrong, or are the reports wrong?
Mike “Mish” Shedlock
The Fed is doing everything it can to save the bankrupt TBTF (covert owners of the FRBO ? ) banks.
Ref. https://ppjg.me/2020/02/19/federal-reserve-transparency/
HELLO, run-away inflation. Who are the owners of the six mega-corporations ? Right, the bankers.
And the public is told to ignore the possibility the FRBOG is operating as a privately held corporate structure with ownership shares held by the Primary Dealers, i.e., the major bankers who will be getting all of the money?
Perhaps using the FOIA to explore the possibility of the BOG’s ownership should be considered . Ref. https://thedailycoin.org/2020/02/19/federal-reserve-transparency/
Sorry Donald, you´ll need a bigger Fed…
” Too big for Fed: have central banks lost control ? “
We all know what time it is ,cmon the Repo is cover,most of that 1.5 /5trillion is funneled to the PPT under the table to buy stocks,when will they (if ever)stop pretending.
The Fed has decided to buy the entire economy. And you were afraid of socialism lol
Chinese researchers found that you can be contagious up to 37 days.
The real fun for the Fed begins if what is happening leads to widespread downgrades of BBB- / Baa3 bonds into junk territory. Lotsa luck to investment-grade-only funds who have to sell their new junk holdings and those former “investment grade” companies that have to refinance in that market.
I think the one thing to remember is $100 T today or tomorrow won’t magically make the supply lines appear ( China ain’t “up and running”) and the virus stop or go away. It won’t instill confidence in the government either, just the opposite.
All these problems we are going to have to deal with and work through will still be here.
Old and weak people are still going to die in very large numbers.
Even if the government spends 2.4 b (800 B / 325 M citizens) per citizen to keep us safe from the virus.
What are these repos exactly? Bond purchases? QE? Do we have specifics?
The details provided at the link within this article state:
“Securities eligible as collateral for both overnight and term operations include Treasury, agency debt, and agency mortgage-backed securities.”
I realize it says “include” as if other collateral is accepted but I’m pretty sure that is boilerplate and lists what is actually accepted.
While they may be forced to accept less “stable” collateral at a later date they will do everything they can to avoid it. Doing the repo creates reserves and to a lesser extent deposit money. But if the collateral is permanently impaired before it is unwound they cannot destroy the reserves/money created to the extent of the impairment.
Don’t see any other way to read it. The operative term, “at least” suggests to me Powell saying don’t get on the wrong side of this one.
Toooo Infinity! And BEYOND!
I think you are correct.
Anyways, from accompanying statement:
“The terms of operations will be adjusted as needed to foster smooth Treasury market functioning and efficient and effective policy implementation”
If there ever was a ‘break in case of emergency’ moment, we’re there.
If tomorrow another bloodbath, I expect another announcement prior to Monday opening. Rate cut + QE? Whatever it is, it better be massive and open ended.
And remember, technically, whatever junk is on the Fed books–it was less than $1T before 2008 and over $4T now, and soon to go, in 90 days, if this report is accurate, to $5.5T– is not counted as part of the Federal debt! Why? Y? Y u C becuz ‘we owe it to ourselves’ or some such nonsense. According to Fed ‘logic’ if you buy toxic paper* worth almost zero from some zombie company for good US greenbacks, it’s a wash since in theory the toxic paper can be unwound by the Fed for the dollars (reselling it to get back dollars). But toxic paper by definition is nearly worthless. If and when the Fed tries to ‘unwind’ it’s bloated balance sheet, filled with junk, it will find no takers. What happens to those dollars in circulation then? Just hope, as is the case now, the US dollar is seen as a ‘safe haven’ for the rest of the world. But for the rest of the world investing in the US dollar, we’d have IMO hyperinflation by now.
“If and when the Fed tries to ‘unwind’ it’s bloated balance sheet”
…
Another problem for another day. I always figured the FR balance sheet would hit $10 trillion in the next crisis. Likely blow past that as $2trillion+ deficits on deck.
Federal Reserve’s concern RIGHT NOW is orderly functioning overnight lending / treasury market. They’ll have hands full there.
Keeping HSBC and Deutsche ana the other 22 primary broker dealer banks alive and multi billion dollar portfolios safe. That is their only job.
They’ll have to expand their definition of collateral. I’d bet stocks are included.