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65 lines
4.0 KiB
Markdown
65 lines
4.0 KiB
Markdown
Reverse Repo Overnight Lending Chart - Update for May 27 2021
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=============================================================
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| Author | Source |
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| [u/HODLTheLineMyFriend](https://www.reddit.com/user/HODLTheLineMyFriend/) | [Reddit](https://www.reddit.com/r/DDintoGME/comments/nmcn1e/reverse_repo_overnight_lending_chart_update_for/) |
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---
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[𝗦𝗽𝗲𝗰𝘂𝗹𝗮𝘁𝗶𝗼𝗻](https://www.reddit.com/r/DDintoGME/search?q=flair_name%3A%22%F0%9D%97%A6%F0%9D%97%BD%F0%9D%97%B2%F0%9D%97%B0%F0%9D%98%82%F0%9D%97%B9%F0%9D%97%AE%F0%9D%98%81%F0%9D%97%B6%F0%9D%97%BC%F0%9D%97%BB%22&restrict_sr=1)
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Latest from the NY Fed Desk, $485B in reverse repo treasury lending with 50 counterparties. The update exactly matched the curve from the last few days, with R2 increasing to 0.95 from 0.93. Showing $1T by June 10. See below for what this means and how it *might* relate to GME.
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[](https://preview.redd.it/7yrdd6mt5p171.png?width=876&format=png&auto=webp&s=e61e95b77a74d17fc138011d611e229e92193a95)
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Linear for my fellow stats nerds. It seems to be growing above linear and the R value is lower:
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[](https://preview.redd.it/ltohauch6p171.png?width=877&format=png&auto=webp&s=09b31ca90bd08461f4a03024b7153d8593d00935)
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Quick reminder: there is no $500B limit on Reverse Repo treasury lending. There is, however, an $80B limit per participant, so individual banks may start 'running out' of Treasuries to lend onward to their hedgie friends.
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Useful links
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- DD into Repo/Reverse Repo for those who are curious: <https://www.reddit.com/r/DDintoGME/comments/nlbsgy/the_fed_repo_market_and_overleveraged_equities/>
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- Source of Fed Repo/Reverse Repo data: <https://apps.newyorkfed.org/markets/autorates/temp>
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- Some great DD on the true limit of the reverse repo by [u/BlindasBalls](https://www.reddit.com/u/BlindasBalls/): <https://www.reddit.com/r/DDintoGME/comments/nkmoi9/response_to_the_post_about_the_reverse_repo_limit/>
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- Helpful/hilarious explainer on the Reverse Repo situation: <https://www.reddit.com/r/Superstonk/comments/nixxvc/fed_is_in_a_pickle_economy_is_fuk_edition/?utm_source=share&utm_medium=ios_app&utm_name=iossmf>
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If you want to see my charts from the last few days, they're on my post wall: <https://www.reddit.com/user/HODLTheLineMyFriend/posts/>
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Keep on HODLin', friends! 🚀🚀🚀
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-----
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Edit:
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Our friend [u/wehadmagnets](https://www.reddit.com/u/wehadmagnets/) was kind enough to get the walled FT article for me "US investors park cash at Fed as market wrestles with negative yields" from here: <https://www.ft.com/content/cdec7f2e-6129-412c-b118-8906a2a0f92f>.
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TA;DR:
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- Today's Reverse Repo was the largest ever
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- "Investors" (more than just banks) are seeking places to park cash, as other 'safe' places are drying up and/or having zero or negative rates
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- "It is also not over yet." -- analyst at Oxford Economics
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- Cash reserves ballooning due to "the Fed's purchases of $120bn of Treasuries and agency mortgage-backed securities each month"
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- Money-market funds are getting swamped with people's cash (<speculation>flight from equities?</speculation>)
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- Fed is trying to avoid negative rates in money market
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- No one thinks it's over
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- Fed may have to raise interest rates on RRP or reserve balances in member banks to keep the federal funds rates from going lower (at 0.06 on target of 0.0-0.25)
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Edit 2:
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One more tweak, [u/leisure_rules](https://www.reddit.com/u/leisure_rules/) noted that the $120B is $120b total, $80b in T-Bonds and $40b in MBS (Mortgage Backed Securities).
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Um... could those be the Commercial MBS we've been hearing about that are toxic?
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