Federal Reserve to inject almost a trillion in liquidity into the repo market

No big deal.

NY Fed

The New York Fed is authorized by the Federal Open Market Committee (FOMC) to conduct repo and reverse repo operations for the System Open Market Account (SOMA) to the extent necessary to carry out the most recent FOMC directive. The New York Fed's Open Market Trading Desk (the Desk) executes these repo and reverse repo operations in the tri-party repo market.

In a repo transaction, the Desk purchases Treasury, agency debt, or agency mortgage-backed securities (MBS) from a counterparty subject to an agreement to resell the securities at a later date. It is economically similar to a loan collateralized by securities having a value higher than the loan to protect the Desk against market and credit risk. Repo transactions temporarily increase the quantity of reserve balances in the banking system.

In a reverse repo transaction, the opposite occurs: the Desk sells securities to a counterparty subject to an agreement to repurchase the securities at a later date at a higher repurchase price. Reverse repo transactions temporarily reduce the quantity of reserve balances in the banking system.

CNBC

The New York Federal Reserve will continue overnight repurchase operations through October as it seeks to quell market instability from earlier this week.

They conduct 278 billion in bailouts this week amid a rate drop at FOMC. The stock market didn't even blink by any of this oddly enough. However....



There was a transaction and someone sold 6 million shares of the SPY on Friday at the end of the day. The market immediately dropped 200 points. I will be very careful with call options for the next few weeks.



The VIX shot up sharpley late Friday. The next few weeks will be very volatile. Keep your eyes close on the gold and bond market.



Keep your eye on the bond market next week. The 3 month was climbing again on Friday as well. Look for a sharp decline in the 30 year and you know when a sell off is about to hit in the stock market.

ETF and hard assets looking good.

a reply to: Archivalist

GE and Ford move with the market. I'll be grabbing puts on them next week.

a reply to: toysforadults

Shoot...and here I thought I had a pretty good handle on market finances. I guess not.

I have no idea how any of what you posted works.

a reply to: ABNARTY

If you can be more specific I can at least point you in the right direction.

a reply to: toysforadults

The Fed said last Wednesday (after the first injection of $53 billion) that they planned to intervene in repo for a 3rd time "for safe measure", even though the repo market had calmed. Now we are hearing the same exact thing, as they tell us they are intervening AGAIN on Friday (which they did) for #4 ($278 Billion in total),

NOW we learn this will be a "regular thing" until October 10th.

Hmmm....

a reply to: FamCore

Yeah and you know what really got me was the stock market totally ignoring it.

I'm getting put options on everything that moves with the market, calls on the VIX, TVIX and calls on GUSH, OIH, and buying anything oil and gold related.

This Saudi thing is just kicking off as well. This is just the beginning, 1 trillion dollar bank bailout is a big deal.

This is WAY WAY bigger than Lehman brothers.

a reply to: toysforadults

I think the Banks that lend overnight don't want to caught out with bad paper which has all the sub prime stuff that happened in 2008, which led to a liquidity crisis. So the fed anticipating this, is getting ready beforehand to buy the stuff before it causes problems. As they are a buyer of last resort, they just create the money to do it with. They are the Banker in the monopoly game. So stocks that are essentially junk, get elevated someone gets their nice commissions and everything looks great. Half the apartments in London and Sydney are empty, but they are sitting on some ones books as an asset, and the American taxpayer is paying . They might be right doing this to avoid a crisis, but its very strange as the real economy doesn't seem to be doing anything. But have we had a real economy since 2008? shouldn't financial Darwinism have been let loose, and allowed the fittest and most competitive to survive.

a reply to: anonentity

You know what's even weirder?? Jerome Powell, "I wasn't expecting such a strong reaction".

Yeah.. TRILLION dollar bank bailout and liquidity crisis HAPPENING RIGHT NOW. Not a big deal Powell.. meh, ignore. Drop rates .25.

Market acts like nothing happened until someone sold 6 million shares of SPY.

a reply to: toysforadults

I don't have a great understanding of this, but isn't it more a shifting of where funds are and how they flow, as opposed to a QE (Quantitative Easing) flat out creation of money scenario, as in the aftermath of the '08 crash?

Not that it isn't meaningful, but isn't it just a matter of where the money is needs some re-balancing? As in, policy has maybe not been as in touch with the economic situation? I think of it as balancing marbles on a scale (but instead of two plates being weighed, its a bunch of spokes of differing lengths?

I might be totally off-base, should probably have just asked for clarification for the layman

Wow. I was thinking we need to buy a new car but now I am wondering if that is a good idea. Not a good time to have debts I suppose.

a reply to: dogstar23

The Federal Reserve is injecting liquidity (MONEY $$$$) into financial markets. It's QE with a rebrand. They are creating zero's and bailing out banks who have no liquidity (these banks have no money).

originally posted by: rickymouse
Wow. I was thinking we need to buy a new car but now I am wondering if that is a good idea. Not a good time to have debts I suppose.

Nobody knows whats going to happen. There's going to be new systems put in place because this one is collapsing.

Do what I do, watch the bond market VERY closely. When the 30 year drops below the 10 short the SPY and companies that move with the market like Ford GE, CTL.

Deutche Bank is failed but it keeps going....ha

You guys know about selling equities indexes on Rosh.......then buy Attonement......! Oh yeah

Govt can buy stuff to hold off the drop J P Morgan was doing dirty on the comex for 40 years

a reply to: toysforadults

They have stopped the crash we should have had, when you think about it I don't think the modern world can take another 1929,the fed can create money at will, since its unprecedented. Who can predict what will happen. Except a very controlled economy, where the money created can never hit main street.

a reply to: GBP/JPY

Yes but they are doing , them under the Rico act, which was reserved for Mafia guys.

The next time someone posts one of those "Why don't you Americans just pay a little more in taxes and get government health care?" threads, point them to this thread and see if they can figure it out.

originally posted by: rickymouse
Wow. I was thinking we need to buy a new car but now I am wondering if that is a good idea. Not a good time to have debts I suppose.

I know less than nothing on this. But if interest rates are low, it's a good time to borrow, as long as you can afford it. My advice is free and you get every cent's worth.

originally posted by: toysforadults
a reply to: dogstar23
[...]They are creating zero's and bailing out banks who have no liquidity (these banks have no money).

There is a big difference between a bank not having money and not having liquidity.


It's like me have €1000 in my bank account (having money) and being in a pub that doesn't take cards (that's me not having liquidity)
Saying I (or the bank) don't have money is wrong, not being liquid is right


Just sayin'