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NY Fed to pump $75 bn into money markets daily through Oct 10

New York (AFP) - The New York Federal Reserve Bank said Friday it will inject billions into the US financial plumbing on a daily basis for the next three weeks in an effort to prevent a spike in short-term interest rates.

The Fed will offer up to $75 billion a day in repurchase agreements -- exchanging secure assets for cash for very short periods -- through October 10, it said in a statement.

In addition, it will offer three 14-day "repo" operations of at least $30 billion each.

...

More at:
https://news.yahoo.com/ny-fed-pump-75-bn-money-markets-daily...
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NY Fed to pump $75 bn into money markets daily through Oct 10...

Is this part of doing God's work?


-=Ajax=-
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I should ask Wendy:

If this is being done to prevent an interest yield rate inversion, does it affect the probability of a recession?

Which s the chicken and which is the egg?

Jeff
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I should ask Wendy:
If this is being done to prevent an interest yield rate inversion, does it affect the probability of a recession?


This is a technical operation to prevent the banks' funding pipes from freezing up.

The Fed's hand was forced when the big banks with excess reserve balances refused to lend to smaller commercial banks overnight or for short periods of time unless the big banks were not only secured, but also compensated by interest much higher than the Fed Funds target rate.

This $75 billion is being offered to prevent overnight market forces of commercial bank-to-bank secured financing from pushing interest rates higher - all the way up to the risk-adjusted rate as determined by commercial banks between themselves.

The Fed has apparently conquered every market except the market of the bankers themselves. Therefore, the Fed itself is now stepping in and lending to banks directly so they don't have to trust each other. That's what the $75 billion daily is for.

https://www.thestreet.com/investing/fixed-income/ny-fed-cond...

;-)
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notehound posts,

Therefore, the Fed itself is now stepping in and lending to banks directly so they don't have to trust each other.

</snip>


Libertarians and various anti-Gov't types don't appreciate this very necessary service that the Gov't provides.

I imagine that the bankers are very much aware of the perils of the leveraged financial swap casino they're operating in.

intercst
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