The funding shortage is once again getting worse…
The funding shortage is once again getting worse. In fact, adding across the overnight and term repo ops, there was a total $142BN funding need today, the highest yet!
The new repurchase agreement (repo) program was supposed to only last through October 10th with a daily overnight repo borrowing limit of $75 billion dollars (that’s supposed to be paid back immediately with interest) and then a separate 14 day term borrowing facility. According to Danielle DiMartino Booth, the Fed’s balance sheet doesn’t expand unless the Fed expands the borrowing beyond 14 days.
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