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First ‘Ultra-Long’ Term Repo Covering Year-End Is Twice Oversubscribed (Cue Alarmists)

Here's some nuance, for those interested.

The first of the Fed's “ultra-long" term repos was two times oversubscribed on Monday, a development which will be pitched as wholly unimportant, totally expected or a blaring ambulance siren, depending on whose take you're inclined to believe. As a reminder, the Fed announced the new schedule a couple of Thursdays ago, and it didn't exactly come as a surprise that they offered tenors beyond the 14-day operations they began conducting alongside the O/N ops necessitated by the September funding squeeze. There are plenty of folks who continue to fret about the possibility of the September episode repeating at year-end. BofA’s Mark Cabana, for example, has variously warned about a "combustible cocktail" of reserve shortage and dealer intermediation constraints related to GSIB. Read more: Analyst Who Called Funding Squeeze Not Blown Away By Fed’s Longer-Term Repos The Fed took $49.05 billion in bids for the first of two 42-day term operations on Monday. Results Amount ($B) Rate (%) Collateral Type   Submitted Accepted Stop-Out1 Weighted Average2 High Low Treasury 33.550 19.250 1.60 1.643 1.73 1.57 Agency 5.000 .000 N/A N/A 1.60 1.59 Mortgage-backed 10.500 5.
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