The reverse repo market witnessed a sharp decline, plummeting to $865 billion within a single day—a $65 billion drop and one of the most significant liquidity injections in reverse repurchase agreement (RRP) history.
As liquidity floods the markets, questions arise about the potential repercussions when the RRP liquidity pool eventually runs dry. The uncertainty looms large, prompting us to contemplate the necessity of additional quantitative easing (QE) measures to avert potential illiquidity in the second quarter of 2024.
Citibank fired 8k employees last week, banks starting to feel empty pockets.
Bent just wrote about liquidity crunch with UBS. It appears cracks are forming. Scary stuff
It needs a number of credit events to break them. But yes, they are brewing in the banking sector if You see unrealized losses. They need to inflate the bond market asap and to prevent real estate (both collaterals) from further declining.
I can feel the vibes... but now I bitcoin
We too I guess
For those of us (me) too dumb to know what a reverse repo market is, i asked chat gpt and also to interpret the graph submitted by OP:
Sorry. I should have done that by myself. Thank You
Is that reverse repo or the SPR. Haha
It's the inverse SPR
People who trumpet the impending "soft landing" fail to understand that the market didn't absorb the rate hikes without issue; countervailing forces like the reverse repo usage as seen in the chart above basically stealthily dripped liquidity in the market to take the edge off the unprecedented hiking pace.
In reality we've been in a largely sideways picture liquidity-wise and like OP mentioned it will be very interesting to see what happens if/when that facility gets fully tapped out.
I think the soft landing narrative comes from the Biden campaign to push the polls a little bit. But yeah, it's far beyond reality
"... in the second quarter of 2024"
You sure it's gonna take that long? Looks like a lot sooner to me.
You could be right. But don't forget: central banksters are magicians. Maybe it'll happen in Q1 2032.... we're on life support since the GFC!
Yea, good point. It's all centrally planned, so there's no way for us capital markets to organize and allocate efficiently. Never know what they're gonna do.
Their sphere of influence diminshes the further You go out on the yield curve. The long end will kill thr commie money printer while the CBs are following the 2y us bond rate like a stupid little ugly dog
This'll be good for an ~econ sub, once we have it.
Yes. And one thing: did anyone here notice that literally noone in the ''free'' media or independent ''science'' is writing about or investigating on hidden market opetations of the central banks? Wonder why...