Hints and tips:
...Cabana and Skyrm agreed that a 2019-style clog-up in the repo market was not a principal concern....
...“All of this shuffles around the buyers and the sellers and the market,” said Scott Skyrm, a repo trader at Curvature Securities....
...The Fed’s balance sheet peaked in April 2022 just shy of $9tn and has shrunk by roughly $850bn, according to calculations from Scott Skyrm, a repo trader at Curvature Securities....
...But the market hasn’t really needed that much cash,” said Scott Skyrm, a repo market specialist at Curvature Securities....
...As Scott Skyrm, a repo trader at Curvature Securities, put it to Unhedged, the Treasury market’s problem is excess supply....
...Scott Skyrm, a repo trader at Curvature Securities, said the rate adjustments announced on Wednesday would help at the margin but RRP demand was likely to remain elevated....
...“It’s not like it used to be,” said Scott Skyrm, executive vice-president at repo broker-dealer Curvature Securities....
...“The longer we sit down here at zero the more distortions you are going to see,” warned Scott Skyrm, a repo trader at Curvature Securities....
...Scott Skyrm, a repo trader at Curvature Securities, called it an “important” moment signalling a return to normality in the market....
...The repo rate steadied around 1.65 per cent on Tuesday, according to Mr Skyrm....
...said Mr Skyrm. “It seems like they are. We will see in the next few days.”...
...“The Fed is stuck where if they stop doing repo operations, it will wean the market off cheap cash, but it will create volatility and drama as they do it,” said Scott Skyrm, a repo trader at Curvature Securities...
...“It’s all in the Fed’s hands right now,” said Scott Skyrm, a repo trader at Curvature Securities. “The market will be very disappointed if they see the Fed still come in with a $15bn operation.”...
...“Nothing was abnormal at year-end, but it was not abnormal with $255.6bn in the market from the Fed,” said Scott Skyrm, a repo trader at Curvature Securities. “That is what is now normal.”...
...Now they want to replace that,” said Scott Skyrm, a repo trader at Curvature Securities. “Rates would otherwise have gone up.”...
...“The Fed said it was here for more if needed but the banks didn’t take it,” said Scott Skyrm, a repo trader at Curvature Securities. “It’s a good sign.”...
...“Right now there is so much uncertainty,” said Scott Skyrm, a repo trader at Curvature Securities....
...“There has been no stress whatsoever,” said Mr Skyrm. “It’s the opposite.”...
...But as Skyrm observes in his daily report, these bonds are currently trading very “special” at rates below the 3 per cent fails charge....
...It comes from Scott Skyrm at Wedbush who incidentally also notes the following: The 10 Year Note is not the only Treasury with a shortage in the Repo market....
...“It sounds to me like the Treasury is being proactive and they want to be prepared to see if there will be a repeat of March where there was a significant amount of fails,” said Scott Skyrm, managing director...
...To wit, Scott Skyrm at Wedbush notes the fact that ahead of the FOMC the repo rate for the 10-year note averaged below the fail charge rate of -2.27 per cent for six days is significant....
...“All these spreads within the repo market are widening,” said Scott Skyrm of Wedbush Securities. “That says banks don’t want to take any risk....
...Scott Skyrm at Wedbush Securities expects repo rates — where investors lend their cash to banks — to rise to the lower end of the new target range, depending on the appetite for the RRP programme from investors...
...Speaking of low yields, collateral guru Scott Skyrm at Wedbush notes that repo rates in particular are acting incredibly counter-intuitively given the time of the month and experiencing something of a precipitous...
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