2016 - A tough year?

Genosis

Genosis

Arch-Supremacy Member
Joined
Nov 23, 2015
Messages
10,104
Reaction score
6
Shiny Things said:
Hang on, this isn't right, this is not even wrong. The guy who wrote that Yahoo article has no idea what he's on about. He's scaremongering.

Here's what actually happened. This is going to get boring and nerdy, but it just sh!ts me right up the wall when people who should know better go scaremongering about normal everyday market movements.

Banks like to have a lot of cash on hand over the turn of the year - but not too much. It looks like when it came to December 31st, the US banking system had a whole lot of cash on its balance sheets - more than it needed to hold. So banks placed that $475 billion with the Fed through its reverse repo program; it's not "selling $475 billion to banks", it's "the banks depositing $475 billion with the Fed, for four days over the turn of the year, in loans secured by US government bonds".

I don't know where they got "0.12%" for the Fed Funds rate from, unless it was from that Zerohedge post that didn't cite a source either. The fed funds market trades back and forth at different levels during the day; that 0.12% might have been a small trade, or even a really weak offer that never got traded on. The NY Fed hasn't posted the Dec 31st Fed Funds fixing yet, so nobody, especially not Zero Hedge, knows what the rate was.

And Third Avenue Credit's blowup has nothing to do with the Fed hiking rates, or with volumes in the Fed's reverse repo facility, or anything else in the article. The dude at Yahoo is trying to connect two things that have nothing to do with each other.
Click to expand...

Thank goodness we have u here, Shiny Things. :)
 
S

skyjuicetse

Banned
Joined
Dec 28, 2015
Messages
95
Reaction score
0
Shiny Things said:
....
Banks like to have a lot of cash on hand over the turn of the year - but not too much. It looks like when it came to December 31st, the US banking system had a whole lot of cash on its balance sheets - more than it needed to hold. So banks placed that $475 billion with the Fed through its reverse repo program; it's not "selling $475 billion to banks", it's "the banks depositing $475 billion with the Fed, for four days over the turn of the year, in loans secured by US government bonds".
......
Click to expand...

Agree, it is a reverse repo as shown in Fed's balance sheet..But "sold" is not a wrong term to use; Fed can't use the word "sold" and many layman can't understand what reverse repo means.
2z8e1br.jpg


But $475 billion is not a small number.. equal almost to all the QEs added together. doubtful that the US banks have such to deposit as many are losing money in 2015 and some are in dangers of sinking. Anyway, it is drain of liquidity from the market. In short, tightening.. not a pretty sight.
 
Last edited:
P

pcuser123

Master Member
Joined
Dec 21, 2007
Messages
3,845
Reaction score
454
skyjuicetse said:
The banks still have money to deposit in Fed?
Click to expand...

US$475 billion is a lot money to recall from the banks.. Bank sure die pain pain. I suppose this is an agreement which can be negotiated or extended? Unless Fed is hard up for this money which cannot be imagined
 
Last edited:
I

IronMac

Supremacy Member
Joined
Mar 25, 2012
Messages
9,006
Reaction score
10
pcuser123 said:
US$475 billion is a lot money to recall from the banks.. Bank sure die pain pain. I suppose this is an agreement which can be negotiated or extended? Unless Fed is hard up for this money which cannot be imagined
Click to expand...

Did you actually read what ShinyThings wrote? The banks deposited the money with the Fed, it was not "recalled" in any way.
 
P

pcuser123

Master Member
Joined
Dec 21, 2007
Messages
3,845
Reaction score
454
IronMac said:
Did you actually read what ShinyThings wrote? The banks deposited the money with the Fed, it was not "recalled" in any way.
Click to expand...

You did not read skyjuicetse post? Bank where got the money to deposit? They use beautiful terms "loans from the Banks"; effectively, a recall. Why Fed want to borrow from the banks? They use the term "reverse repo" which effectively means "sold" or "return" lah.
 
Last edited:
S

skyjuicetse

Banned
Joined
Dec 28, 2015
Messages
95
Reaction score
0
pcuser123 said:
You did not read skyjuicetse post? Bank where got the money to deposit? They use beautiful terms "loans from the Banks"; effectively, a recall. Why Fed want to borrow from the banks? They use the term "reverse repo" which effectively means "sold" or "return" lah.
Click to expand...

Reverse Repo is one of the Central Bankers' tool to regulate the money market. There are also other tools.. $475 billion is a record; understand PBOC only 20 or 30 bil at a time.
 
S

skyjuicetse

Banned
Joined
Dec 28, 2015
Messages
95
Reaction score
0
skyjuicetse said:
Reverse Repo is one of the Central Bankers' tool to regulate the money market. There are also other tools.. $475 billion is a record; understand PBOC only 20 or 30 bil at a time.
Click to expand...

Can't quite understand why Jared Blikre worked out that the effective Fed rate dropped. Google search will say that reverse repo is one tool that central bankers used to withdraw liquidity from the market, effect will be like tightening.
 
Perisher

Perisher

Greater Supremacy Member
Deluxe Member
Joined
Jan 5, 2015
Messages
84,184
Reaction score
10,104
pcuser123 said:
You did not read skyjuicetse post? Bank where got the money to deposit? They use beautiful terms "loans from the Banks"; effectively, a recall. Why Fed want to borrow from the banks? They use the term "reverse repo" which effectively means "sold" or "return" lah.
Click to expand...

skyjuicetse said:
Reverse Repo is one of the Central Bankers' tool to regulate the money market. There are also other tools.. $475 billion is a record; understand PBOC only 20 or 30 bil at a time.
Click to expand...

Erm, clones are not allowed here.
Kindly picked 1 account to post. Let me know which one you prefer to keep? :)
 
Perisher

Perisher

Greater Supremacy Member
Deluxe Member
Joined
Jan 5, 2015
Messages
84,184
Reaction score
10,104
Franzz said:
moi jus kidding, prease dunch bend moi. franzz next year 10 years anniversary in hwz, i wanna celebrate treat chiu all jiak buffet de~!!

:(:o:(
Click to expand...

Quote for buffet next year, if I still remember...:D
 
You must log in or register to reply here.
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top