Fed can't control repo market problem, creating issues, says Gundlach - Business Insider

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'I take that as a very bad sign': Billionaire bond king Jeffrey Gundlach explains how the Fed's inability to control the repo rate is masking deeper issues

. "It depends how you want to frame what is going on with the Fed increasing its balance sheet — pumping more reserves — to try to deal with the out-of-control repo problem that started up September 17th."

Below is a chart depicting spikes in the repo rate juxtaposed against the fed funds rate. In theory, both rates should mirror one another with little variance.To Gundlach, the rate action taking place in the repo market is alarming — and there must be an explanation for this sudden, unexpected increase.

 

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