Monday, March 1, 2021

Tag: Fed Drains $45 Billion from Repo Market

Fed Drains $45 Billion from Repo Market, back to Oct Level. T-Bill Purchases Continue. Assets Shrink by Most Since QT

by Wolf Richter, Wolf Street:

The week after the year-end Repo Chaos didn’t happen.

The feared chaos in the repo market over the year-end period didn’t materialize as the Fed had flooded the market with cash via repo operations and purchases of T-bills (Treasury securities with maturities of one year or less). This kept repo rates glued to the bottom of the Fed’s target range for the federal funds rate at just over 1.5%. But it sure took a big flood of liquidity to douse that potential chaos – $410 billion between September and January 1 – and now some of that liquidity got drained.