U.S. Fed's reverse repo volume surges to record half a trillion dollars

kmiklas said:
Is this a way to test, in the short term, what happens when liquidity is removed from the system?

It seems counter-productive to issue QE while at the same time soaking liquidity up with reverse repos.

What I really don't understand: if a reverse repo pays 0%, why bother... why not just hold in ca$h?

If anyone can shed some light I'd appreciate it.

https://www.reuters.com/article/us-usa-fed-reverse-repo-idUSKCN2DL29J
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It is pointless, and the Fed has engaged in such pointless exercises before for what presumably was the purely psychological effects of making people think there was easing going on. But this time I don't think the Fed is still engaged in QE at the moment?
 
Sig said:
But this time I don't think the Fed is still engaged in QE at the moment?
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The Fed has done astonishingly well (performance wise) with their balance sheet and I could envision them selling Treasuries and rolling the proceeds into the Repo Market lending facilities - which would provide both collateral and liquidity into the primary and secondary markets. I know that they've already sold quite a bit of the Corporate Debt they purchased last Spring/Summer.
 
Jefferson's fears realized.

They might as well be for-profit to fund some of the deficit spending. Their own self-interest will guide them to protect the dollar.
 
Zoltan thinks the Fed will unwind as the asset cap for Wells Fargo will be lifted...which would introduce $500B in demand for assets and can ease a potential taper tantrum. If they can pull it off it may be a soft landing.
 
xandman said:
Jefferson's fears realized.

They might as well be for-profit to fund some of the deficit spending. Their own self-interest will guide them to protect the dollar.
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So the Fed buys assets and then is able to resell them for a profit....that's apparently bad.
If the Fed had bought assets and then resold them for a loss....no doubt you'd be saying that's bad?
Can't have it both ways.
 
Sig said:
So the Fed buys assets and then is able to resell them for a profit....that's apparently bad.
If the Fed had bought assets and then resold them for a loss....no doubt you'd be saying that's bad?
Can't have it both ways.
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Not so much the profits. But, the level of participation that is propping up zombie firms.
 
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