The repo market is ‘broken’ and Fed injections are not a lasting solution, market pros warn

The Federal Reserve’s ongoing efforts to shore up the short-term “repo” lending markets have begun to rattle some market experts.

“The big picture answer is that the repo market is broken,” said James Bianco, founder of Bianco Research in Chicago, in an interview with MarketWatch. “They are essentially medicating the market into submission,” he said. “But this is not a long-term solution.” The facilities allow banks to snap up loans by pledging safe-haven U.S. Treasurys or agency mortgage-backed securities with the New York Fed, but crucially without the typical risk-based pricing that lenders regularly charge when funding each other.The goal was to keep banks flush as they deal with month-end funding issues, corporate tax payments, and the deluge of Treasury debt being sold by the federal government to fund its deficit.

“This is now far bigger than anyone thought this was going to be,” Bianco said. “I think they’re hoping the market will magically fix itself. I don’t see why it would.” “The Fed really hasn’t figured out the problem,” said Bryce Doty, a senior portfolio manager at Sit Fixed Income in Minneapolis. “But they kind of have created their own problem.”

Malaysia Malaysia Latest News, Malaysia Malaysia Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Survey showing how much trading desks will rely on data analysis - Business InsiderA recent survey by Greenwich Associates indicates the high value Wall Street puts on data analysis, market structure, and market knowledge.
Source: BusinessInsider - 🏆 729. / 51 Read more »

How mHealth apps are providing solutions to the healthcare market's problems - Business InsiderAre you using your phone to stay healthy? That's mHealth! See how the growing market of mobile health apps stands to benefit the entire health ecosystem.
Source: BusinessInsider - 🏆 729. / 51 Read more »

Jim Cramer: China trade is a 'much smaller issue' on the market than most people realizeTrade fears 'will eventually create fabulous discounts' in the stock market, but 'we're not totally there yet,' the 'Mad Money' host says. Whatever Jim Cramer says you should believe the exact opposite It is great You and Trump have lost your minds! Geezus Jim!
Source: CNBC - 🏆 12. / 72 Read more »