fed fomc Markets

‘This Isn’t Whatever-It-Takes’: Analyst Who Called Funding Squeeze Not Blown Away By Fed’s Longer-Term Repos

"We’re prepared to continue to learn and adjust".

Late last month, BofA's Mark Cabana sounded a cautious tone on what he's calling a “combustible cocktail” that may create the conditions for another squeeze in short-term funding markets at the end of the year. Specifically, he's worried about reserve shortage and dealer intermediation constraints related to GSIB. Cabana, you're reminded, repeatedly warned that an episode like that which rippled across the repo market during the week of September 16 was likely imminent, prior to it actually unfolding. Read more: Analyst Who Called The Repo Squeeze Warns On ‘Combustible Cocktail’ Into Year-End Three weeks back, Cabana offered a series of potential remedies the Fed might deploy in an effort to ameliorate any potential year-end strain, one of which involved “ultra-long” term repos (i.e., tenors beyond the 14-day operations the Fed started conducting alongside the O/N ops following the September squeeze). In addition to providing certainty, such a move would “push MMF away from dealers and into the FICC sponsored repo platform… add[ing] an additional source of cash that could be used to assist in stabilizing the repo market on year end”, Cabana remarked. On Thur
Subscribe or log in to read the rest of this content.

0 comments on “‘This Isn’t Whatever-It-Takes’: Analyst Who Called Funding Squeeze Not Blown Away By Fed’s Longer-Term Repos

Speak your mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Skip to toolbar