flow5
Well-Known Member
Joined: Dec 20, 2010 21:18:02 GMT -5
Posts: 1,778
|
Post by flow5 on Oct 8, 2014 7:36:35 GMT -5
NO.
NEW YORK, Oct 7 (Reuters) - There was no evidence the recently implemented limit in the testing of a key program that the Federal Reserve will use when it begins to raise interest rate disrupted the U.S. funds market, the head of the Markets Group at the Federal Reserve Bank of New York, Simon Potter, said on Tuesday.
The Federal Open Market Committee, the U.S. central bank's policy-setting group, last month imposed a $300 billion limit on the fixed-rate overnight reverse repurchase program in which the Fed pays participants including banks and money market funds to borrow Treasuries that belong to the Fed.
If the total bidding for RPPs that day goes above $300 billion, an auction process kicks in. The Fed awards to the bidders based on the rate they bid for the RPPs.
On last day of the third quarter, bidding was intense and the Fed awarded the RRPs at an interest rate of zero rather than 0.05 percent the previous days, raising concerns in the market the limit may have to be raised.
"The auction procedure went smoothly and while rates did trade soft on the quarter end, this was only a temporary phenomenon and there was no evidence of market disruption from the unfilled bids at the auction," Potter said .
Potter was speaking at an event on securities financing transactions sponsored by the Securities Industry and Financial Markets Association (SIFMA), an industry group made up of banks, asset managers and Wall Street firms.
|
|
flow5
Well-Known Member
Joined: Dec 20, 2010 21:18:02 GMT -5
Posts: 1,778
|
Post by flow5 on Oct 8, 2014 11:30:35 GMT -5
Elliot wave projection got it right:
So, what we have tracked, so far, is waves (i) and (ii) of Minuette degree, with Micro degree wave [3] of Subminuette wave iii about to get underway — a third-of-a-third-of-a-third. If this is the correct count, the markets should succumb early in the week and slide hard, probably much harder than any day last week, perhaps one of the hardest of the year. |
|
damnotagain
Well-Known Member
Joined: Oct 19, 2012 21:18:44 GMT -5
Posts: 1,211
|
Post by damnotagain on Oct 8, 2014 11:46:50 GMT -5
NO.
NEW YORK, Oct 7 (Reuters) - There was no evidence the recently implemented limit in the testing of a key program that the Federal Reserve will use when it begins to raise interest rate disrupted the U.S. funds market, the head of the Markets Group at the Federal Reserve Bank of New York, Simon Potter, said on Tuesday.
The Federal Open Market Committee, the U.S. central bank's policy-setting group, last month imposed a $300 billion limit on the fixed-rate overnight reverse repurchase program in which the Fed pays participants including banks and money market funds to borrow Treasuries that belong to the Fed.
If the total bidding for RPPs that day goes above $300 billion, an auction process kicks in. The Fed awards to the bidders based on the rate they bid for the RPPs.
On last day of the third quarter, bidding was intense and the Fed awarded the RRPs at an interest rate of zero rather than 0.05 percent the previous days, raising concerns in the market the limit may have to be raised.
"The auction procedure went smoothly and while rates did trade soft on the quarter end, this was only a temporary phenomenon and there was no evidence of market disruption from the unfilled bids at the auction," Potter said .
Potter was speaking at an event on securities financing transactions sponsored by the Securities Industry and Financial Markets Association (SIFMA), an industry group made up of banks, asset managers and Wall Street firms.
The article I read did not mention the auction process above 300 billion. Do you think the fed can really raise rates? thank you for the heads up on market direction next week. Your killing it flow5.  |
|
flow5
Well-Known Member
Joined: Dec 20, 2010 21:18:02 GMT -5
Posts: 1,778
|
Post by flow5 on Oct 10, 2014 5:15:14 GMT -5
Open market operations [QE], between the Central (reserve) bank only increase IBDDs (are asset swaps). Whereas OMOs between the FRB-NY's "trading desk" and the non-bank public (e.g., MMMFs, etc.), impact both money [M1], and IBDDs (excess and required reserve balances).
Obviously, the expanded list of NBs (Jan 15, 2013), are currently bidding more aggressively (quarter ending pressures?). Unless the "desk" can isolate its counterparty (instead of watching the relationship between money market rates vs. its target, or policy interest rate), it has no idea what the impact is on the volume of money. It is the rate of increase in the money stock, and money flows, that drive the economy (and stocks), not short-term interest rates.
Establishing a floor (stop-out rate), doesn't ensure a link that is consonant with the propervolume of our "means-of-payment" money (like a money multiplier). It only impacts the spread between different short-term liquid assets (forming the “desk’s” floor, ceiling, and corridor). And the interbank rate (FFR) is irrelevant besides (IBDDs aren’t evenly distributed). And reserves aren’t binding either (85 percent are satisfied thru the CBs applied vault cash).
Keynes' liquidity preference curve (demand for money) is a false doctrine. Interest rates are the price of loan-funds, not the price of money. The price of money is the reciprocal of the price level. The demand for loan-funds reflects the advantages of spending borrowed money (from both the CBs + NBs, not just the CBs).
Most economists refer to the RRP facility as an exit policy tool which drains excess reserve balances (IBDDs). Instead, its principle impact is one that drains the money stock (that should have been the reason for expanding the "desk's" list of counterparties).
The Federal Reserve currently has 140 RRP counterparties – The NBs are represented by 94 of the largest 2a-7 money market funds, six government-sponsored enterprises (Fannie Mae, Freddie Mac, and four Federal Home Loan Banks). The CBs are represented by 18 banks, and the 22 primary dealers.
The volume of O/N RRPs has been trending up (exceeding 100,000 $M on 2/4/2014). Those maturing within 15 days on the H.4.1 release date Oct 9 2014 stand @ 276,866 ($M). Today, 167,770 ($M) are due to settle 10/10/14 (so stocks reverse to the upside).
The impact on the stock market depends on whether the rate-of-change [roc] in MVt is rising or falling (and the high-payment reserve maintenance rotation). Draining money when there are seasonal downside pressures (like at present), triggers and exacerbates speculative selling. I.e.., the impact of O/N RRPs on stocks depends upon whether liquidity is increasing or decreasing. This influence should be removed after 10/15/2014 (when the roc in MVt bottoms). |
|
flow5
Well-Known Member
Joined: Dec 20, 2010 21:18:02 GMT -5
Posts: 1,778
|
Post by flow5 on Oct 13, 2014 9:26:03 GMT -5
Repos
167.770 ,,,,, 10/9/2014 ,,,,, 10/10/2014
182.531 ,,,,, 10/8/2014 ,,,,, 10/9/2014
184.514 ,,,,, 10/7/2014 ,,,,, 10/8/2014
185.508 ,,,,, 10/6/2014 ,,,,, 10/7/2014
184.682 ,,,,, 10/3/2014 ,,,,, 10/6/2014
179.039 ,,,,, 10/2/2014 ,,,,, 10/3/2014
212.481 ,,,,, 10/1/2014 ,,,,, 10/2/2014
407.167 ,,,,, 9/30/2014 ,,,,, 10/1/2014
194.566 ,,,,, 9/29/2014 ,,,,, 9/30/2014
172.960 ,,,,, 9/26/2014 ,,,,, 9/29/2014
158.090 ,,,,, 9/25/2014 ,,,,, 9/26/2014
162.317 ,,,,, 9/24/2014 ,,,,, 9/25/2014
174.426 ,,,,, 9/23/2014 ,,,,, 9/24/2014
178.327 ,,,,, 9/22/2014 ,,,,, 9/23/2014
169.519 ,,,,, 9/19/2014 ,,,,, 9/22/2014
168.148 ,,,,, 9/18/2014 ,,,,, 9/19/2014
156.936 ,,,,, 9/17/2014 ,,,,, 9/18/2014
147.752 ,,,,, 9/16/2014 ,,,,, 9/17/2014
135.916 ,,,,, 9/15/2014 ,,,,, 9/16/2014
148.338 ,,,,, 9/12/2014 ,,,,, 9/15/2014
167.400 ,,,,, 9/11/2014 ,,,,, 9/12/2014
160.299 ,,,,, 9/10/2014 ,,,,, 9/11/2014
168.607 ,,,,, 9/9/2014 ,,,,,,, 9/10/2014
180.490 ,,,,, 9/8/2014 ,,,,,,, 9/9/2014
|
|
flow5
Well-Known Member
Joined: Dec 20, 2010 21:18:02 GMT -5
Posts: 1,778
|
Post by flow5 on Oct 13, 2014 10:07:58 GMT -5
Repos from the Fed’s new policy tool – the reverse repurchase agreement facility (with its expanded counterparties), involve the “trading desk” at the FRB-NY supplying generally overnight securities from SOMA (Treasury Bills or GC), for the temporary exchange of cash (bank deposits).
The dollar volume of O/N RRPs varied little (so the volume of existing money drained from the economy remained virtually constant). But the value of the SOMA collateral offered became progressively scarcer as the roc in money flows was decelerating (coinciding with the average seasonal inflection point on 9/22 - as Art Cashin warned on ZeroHedge).
3 month T-bills yielded .04% on 8/27/2014. They now yield .01%. Moody’s AAA corporates yielded 4.22% on 9/18/2014. Now they yield 3.92%.
With the continuous daily roll-over of these trades, money was simultaneously becoming tighter and collateral was becoming progressively more valuable (creating a reinforcing, "anticipatory", and contractionary effect).
|
|
flow5
Well-Known Member
Joined: Dec 20, 2010 21:18:02 GMT -5
Posts: 1,778
|
Post by flow5 on Oct 17, 2014 19:24:08 GMT -5
Bankrupt U Bernanke is responsible for QE. With the bond bubble (and historically low rates of returns), if rates rise significantly (i.e., if the economy runs even a little faster), bond holders (including the TBTF banks), will get hit.
The “trading desk” bought 1,087 billion of securities in 2013, and 430in 2014. This compares to a fiscal deficit of 680 billion in 2013 (4.1% of gdp), and a fiscal deficit of 483 billion in 2014 (2.8% of gDp). That is the Fed has monetized all of the new issuance. Fortunately the deficits are declining.
Interest rates are determined by the supply of and demand for loan-funds.Removing securities from the secondary market has obviously suppressed rates. Treasury and agency securities held by the CBs have risen by 40 percent since 7/1/2009 (beginning of FRED series). But Treasury and agency securities (as a percentage ofbank credit), have only risen from 11% to 13%. Gov’ts may be zero-risk weighted by Basel standards, but the CBs preferred to offload the risk to the Fed (swap them for IBDDs). |
|
Yep, looks like someone is crusty about the depression in Europe, China's housing bubble, and the socioeconomic/geopolitical issues that are plaguing the world, eh? Bond market says no inflation.. 
have found bad numbers from the Fed Government!
