- Liquidity Panic Returns: Term-Repo Most Oversubscribed Since Start Of Repo Crisis As Fed Injects $94.5BN
by Tyler Durden, https://www.zerohedge.com/
Update: confirming that liquidity is indeed quite scarce to start the month of February, moments ago the Fed also conducted its overnight repo which saw a whopping $64.45BN in liquidity injected…
… and which together with the massively oversubscribed $30BN term repo discussed below, means the Fed has injected $94.45BN in liquidity for today’s market needs.
After several relatively uneventful reverse-repos to close off the month of January, which saw a gradual decline in submission, February has started off with a bang. Even ahead of the results of today’s reverse repo, some traders were already closely watching to see how it would play out for one main reason: as we reported on Jan 14, this was the first “tapered” reverse repo, whose aggregate operation limit was shrunk modestly from $35BN to $30BN.
We got the answer moments ago, when the Fed announced that while the operation went off without a glitch, the demand for Fed liquidity was simply unprecedented, with $59.05BN in securities submitted ($41.75BN in TSYs, $17.3BN in MBS) for the downsized $30BN term repo maturing on Feb 18. As such, the nearly 2.0x submitted-to-accepted ratio made today’s repo the most oversubscribed since the first term repo issued at the depth of the September repo crisis (and not by much), which saw $62BN in submissions for $30BN in liquidity.