All articles tagged with #repo market
The article discusses how the Federal Reserve's balance sheet is becoming a focal point amid rising liquidity concerns, with recent volatility in short-term interest rates and signs of potential distress in the repo market, leading to increased use of the Fed's Standing Repo Facility.
Wall Street executives anticipate potential turmoil in the U.S. short-term financing markets, with events between March and May expected to reduce cash in the financial system and increase demand for liquidity. The expiration of a Fed lending facility, massive government debt issuance, and faster trade settlement could exacerbate the situation. The Fed's reduction of cash from the financial system and potential stress in short-term financing markets may prompt policy action, with some strategists suggesting a slowdown in quantitative tightening. Sudden spikes in short-term financing markets could pose a threat to financial stability, potentially signaling the need for the Fed to ease policy.