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Pay no attention to the crack in the Hoover dam.
It's only a tiny crack, nothing to worry about.


Well that's reassuring, lol.
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Pay no attention to the crack in the Hoover dam.
It's only a tiny crack, nothing to worry about.

: )
Jim
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The FED overnight loaned $75 billion to banks. Did the banks need more reserves? Or did bank customers want more cash? Where did the cash go? I haven't heard a good answer.

Oil prices spiked higher on Monday because of the weekend attack on Saudi Arabian oil facilities. The oil market is $2 trillion a year worldwide, and so could easily absorb $75 billion in cash. Someone needed to cover their oil hedge on Monday.

It reminds me of the TED Spread, but TEDRATE is based on LIBOR which is more stable than SOFR. TEDRATE spiked to above 2% in October 1987, November 2007, and September 2008. These were liquidity squeezes. Banks wanted more cash on hand because they did not trust counterparties.
https://fred.stlouisfed.org/series/TEDRATE
https://fred.stlouisfed.org/series/SOFR

There are a few threads on METAR.
https://boards.fool.com/liborsofr-black-swan-34297826.aspx
https://boards.fool.com/fed-repo-liquidity-pinch-34297028.as...

"The Fed’s prestige took a hit this week. Its most powerful regional reserve bank somehow botched a critical market rescue operation – its first overnight repurchase agreement operation in a decade."
https://www.bloomberg.com/opinion/articles/2019-09-19/while-...

"Federal Reserve Thursday morning completed its third repurchasing operation, or repos, in as many days"
https://www.marketwatch.com/story/fed-completes-3rd-straight...

"The surge in repo rates began Monday afternoon, well after the vast majority of trading in the market for overnight loans typically takes place, investors, traders and analysts said. The origin of the demand for cash was unclear, as traders seeking cash could have been acting on their own behalf or as intermediaries for other parties, one trader said."
https://www.motherjones.com/kevin-drum/2019/09/whats-wrong-w...

US oil prices had their biggest spike in a decade after Saudi attack disrupts global supply
"US oil futures jumped 14.7%, settling at $62.90 a barrel. It was the biggest spike since January 2009."
https://www.cnn.com/2019/09/15/business/oil-prices-donald-tr...
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Pay no attention to the crack in the Hoover dam.
It's only a tiny crack, nothing to worry about.


RIGHT. What could possibly go wrong?

https://en.m.wikipedia.org/wiki/Johnstown_Flood
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Pay no attention to the crack in the Hoover dam.
It's only a tiny crack, nothing to worry about.


Well that's reassuring, lol.
Print the post Back To Top