It’s been over a month since the 10% Repo rate spike. The ‘first signal’ that something was/is not right with the most important liquidity market that ensures we don’t get a credit crunch. Unfortunately the conditions that ignited this are still apparent. The FED is pretending that we don’t have QE4 – well, we do. The FED balance sheet is expanding again BUT more worryingly in the short end of the yield curve and that ‘smacks’ of damage control. I think it’s a question of watching the junk bond market, the Repo market especially for expanding Repo limits. One of my concerns going forward is the toxicity of MBS’s now in the market – we are seeing/have been seeing demand for up to $30bn funding daily and yet funding each quarter was no higher than $20bn in 2008/9. Hmmmm!!