FED Is Increasing REPO Size

The New York FED (who performs open market operations for the FED) did a pretty giant REPO today.

They did a $73 billion overnight (1 day) repo and an additional $31 billion of 15 day transactions–totaling over $104 billion.

Previously they had hit $87 billion in a day–much less than today. Oh well–a billion here and a billion there.

What does this mean to me? Nothing much now–I guess banks are still short of cash. Normally these are only meaningful for us regular folks in hindsight–big transactions take place and later we find some institution in trouble. Time will tell. Generally I think the FED is BS’ing us in this area.

Tomorrow we find out how large the FED balance sheet has grown and we can ‘net out’ the REPO transactions and find out how much true QE they did (outright purchases of securities for long term holding)–that info is released at noon every Friday.

Here is the New York FED repo page.

11 thoughts on “FED Is Increasing REPO Size”

  1. Apropos:: closed out a long position in COWNL yesterday, up 12% or so since purchase, was planning to hold for years but booking the gain now, just can’t believe the status quo is going to hold. God help us all but sometimes it’s up to us.

    1. D–sometimes one just can’t resist selling. Even what I call my “base” positions are crazy high–I am slowly selling some off, but then as usual I am stuck with too much cash which ends up in dividend capture and flipping–I’d rather ‘invest’.

      1. The last 7 months I have been selling 8%-20% gainers, and re-investing in past call issues within 1 divy/interest payment. It has been working out well. Tax time is going to be huge, but that is ok with me. Recent example is buying thousands of shares in wrb-b, and wfc-p when both especially went under $25.

      2. Me too, Tim, but being just a few years from „retirement „ I‘d rather err on the side of capital preservation. And have what to invest with the next time a correction or the like comes around, which it will.
        Best of luck to all and thank you so much for III.

  2. I blame lack of ‘house’ funds due to Dodd Frank, Volcher rule, and Basil 1,2,3……which sounds as good as anything I’ve heard…which is nothing sensible nor coherent.

  3. The primary dealers HAVE to buy new issue Treasury securities. The funding needs of the US government for the near-to-intermediate future are gigantic. The Fed has to offer short term repos so the dealers have time to re-sell the new issues. This has been known for quite some time. It’s not good news, but it’s to be expected—hopefully not forever.

    1. randy–yes I agree–I know they have to buy–which is leaving them in a squeeze – and record corporates being issued as well – I’m watching closely because I don’t have much trust in what is going on behind the scenes. Thanks for your input.

      1. Powell is obviously right. they won’t call it QE. they will come up with another acronym. I suggest DDH – “Digging a Deeper Hole”.

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