Will The Fed’s Repo Operation Only Last Until October 10th…Or Will It Become Permanent?

The funding shortage is once again getting worse…

by Jason Burack of Wall St For Main St

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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