Buried Like Cockroache's?
Random Natterings... RRP (reverse repo) now pays 25bps, IOER pays 50bps. Why would any bank lend funds for less than they can get on a risk free arb? Some run straight down to the FHLB and borrow at 37bps, then get 50bps on RRP, clearing 13bps risk free.
What's that sound? The black hole of IOER sucking all excess reserves into RRP... and anything on the UST curve under 50bps getting less allotment for bid by default. Short duration yields could jump, flattening the curve.
Back in August I thought it would be bad come December with a commodities "flash crash" and Q116 GDP going negative? I may have underestimated because I never thought the Fed would raise. So, the best is yet to come, as intrabank dollar flows, which the Fed raise and subsequent flood to RRP might cause to contract, and the offshore dollar loans they compete with could send the form of the destructor, aka King Dollar on an unholy global rage on bulls...
in which he might stomp what is left of commodities producers and anyone with dollar debt to death or bury them cockroaches. Kong would be jealous, I guarrronteeee.... oh crap that name and all this talk has agitated King Dollar, no not now, back, back in your cage, not yet my furry simian friend. I have a missive out with all the gory details titled, well it should be Rage-on Bull but I think it's, Is The TED Spread Yellen?
What's that sound? The black hole of IOER sucking all excess reserves into RRP... and anything on the UST curve under 50bps getting less allotment for bid by default. Short duration yields could jump, flattening the curve.
Back in August I thought it would be bad come December with a commodities "flash crash" and Q116 GDP going negative? I may have underestimated because I never thought the Fed would raise. So, the best is yet to come, as intrabank dollar flows, which the Fed raise and subsequent flood to RRP might cause to contract, and the offshore dollar loans they compete with could send the form of the destructor, aka King Dollar on an unholy global rage on bulls...
in which he might stomp what is left of commodities producers and anyone with dollar debt to death or bury them cockroaches. Kong would be jealous, I guarrronteeee.... oh crap that name and all this talk has agitated King Dollar, no not now, back, back in your cage, not yet my furry simian friend. I have a missive out with all the gory details titled, well it should be Rage-on Bull but I think it's, Is The TED Spread Yellen?
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