- Here We Go Again: Zoltan Warns Repo Market On Verge Of Major Shock As Key Funding Rate Turns Negative
by Tyler Durden, https://www.zerohedge.com/
Two weeks ago, when discussing the imminent avalanche of cash set to be unleashed by the Treasury – as a tsunami of $800BN in extra liquidity hits markets over the next 6 weeks, and a total of $1.1 trillion in the next 10 weeks – we said that “nobody was paying attention” to this coming flood of liquidity.
Since then, some have started to pay attention, with Bloomberg writing an article yesterday titled “Yellen Shift on Vast Treasury Cash Pile Poses Problem for Powell” in which it described the liquidity “tsunami” as a move which aims to return its cash position at the central bank to more normal levels, and which “will flood the financial system with liquidity and complicate Powell’s effort to keep a tight grip over money market rates.” Sounds awfully familiar… as does this:
“All this cash from the Treasury’s general account will have to go back from the Fed and into the market,” said Manmohan Singh, senior economist at the International Monetary Fund. “It will drive short term rates lower, as far as they can go.”