FED Repos

We had just posted an update of the FED BS but of note is the FED NY Repo Desk. They plan a Trillion $ of repos! As they state:

Securities eligible as collateral for both overnight and term operations include Treasury, agency debt, and agency mortgage-backed securities. Primary Dealers will be permitted to submit up to two propositions per security type. The minimum bid rate for term repo operations is based on prevailing market rates that reflect market expectations for the path of the federal funds rate over a similar tenor to that of the repo operation. This is a technical parameter and no inference should be drawn about the Federal Reserve’s views on the current or future stance of monetary policy based on the minimum bid rate.

This means we may be seeing a fantastic liquidity squeeze at years end. It could place great pressure on banks and is seen as a market upsetting factor. Worth a watch.