USA "RRP Explosion": Fed Reverse Repo Soars To Third Highest With "Incredible Amount Of Cash" Up to $450 billion per day

hiwall

hiwall

Has No Life - Lives on TB
The Federal Reserve borrows money to banks every day. The amount has been growing daily. It is up to $450 billion per day now.
Note: amounts in Billions

May 11 - $181
May 12 - $209
May 13 - $235
May 14 - $241
May 17 - $208
May 18 - $243
May 19 - $293
May 20 - $351
May 21 - $369
May 24 - $394
May 25 - $432
May 26 - $450

Ahead of today's 1:15pm overnight Reverse Repo deadline we asked (for the second day in a row) if today was the day the repo market finally cracks, pushing the amount of reserves parked at the Fed to a new record above $500 billion.
$500BN in reverse repo today?
— zerohedge (@zerohedge) May 25, 2021
Click to expand...
And for the second day in a row, we were off, but we are getting warmed by the day: on Tuesday, the Fed revealed that the amount of overnight reserves parked at the Fed rose by another $38BN to $433BN (with 48 counteparties, down from 54 yesterday) from $394.9BN on Monday, which was the 3rd highest in history, up a whopping $190 billion in one week and the highest non-quarter end reverse repo usage ever!

Why does this matter? Three reasons, all of which we explained in extensive detail in "Fed Alert: Overnight Reverse Repo Usage Soars Above Covid Crisis Highs", Repo Crisis Looms: Fed's Reverse Repo Usage Soars To $351BN, Fifth Highest Ever, and Zoltan On The Coming QE Endgame: "Banks Have No More Space For Reserves",
  1. The Fed is taking Treasurys out of the market through QE purchases and putting them right back in via the RRP
  2. The heavy use of the o/n RRP facility tells us that foreign banks too are now chock-full of reserves.
  3. Banks don't have the balance sheet to warehouse any more reserves at current spread levels.
As for the immediate market implications they are even more ominous: either the Fed will have to hike the IOER or rates will soon go negative. Worse, with the Fed still planning to do at least $1 trillion in QE even assuming a December taper, and potentially as much as $2 trillion based on the latest just released Fed "forecast", there is simply no place to park all of these reserves.
It's not just us concerned about how clogged up the market plumbing has become: in his daily Repo Market Commentary note from Monday, Curvature's repo market guru Scott Skyrm wrote the following:
RRP Explosion
On March 17, a little over two months ago, there was no volume at the Fed's RRP window. Nothing. Today, it was almost $400 billion! How do you go from zero to $400 billion in two months? Not only was today's activity at the RRP one of the largest ever, it was also THE largest non-quarter-end, non-year-end print. There's an incredible amount of cash in the Repo market right now! Clearly, the Fed took too much collateral out of the market - or - added too much cash.
The market is distorted from too much QE and hopefully QE tapering will be announced in June.
Click to expand...
And while Powell & Co pretend that they can continue business as usual for years to come, the repo market is not only cracking but banks, full to the gills with inert reserves and which increase by $30 billion every week, are on the verge of pulling a Mr Creosote...

... and balking at even a penny of additional liquidity. How the Fed will continue to monetize debt then, when the repo system is now out of collateral, is anyone's guess.

"RRP Explosion": Fed Reverse Repo Soars To Third Highest With "Incredible Amount Of Cash" | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
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hiwall

hiwall

Has No Life - Lives on TB
I don't know if this means anything or not. But it sure seems mighty odd.
I bet on the 29th it will go over a half trillion. (It always bumps up the last day of the month.)
Oh, these amounts are NOT reflected on the Fed's balance sheet.
 
The Snack Artist

The Snack Artist

Membership Revoked
hiwall said:
I don't know if this means anything or not. But it sure seems mighty odd.
I bet on the 29th it will go over a half trillion. (It always bumps up the last day of the month.)
Oh, these amounts are NOT reflected on the Fed's balance sheet.
Click to expand...
It's small change anyway. 500 billion? Peanuts. Three months ago? It was, "All hell is breaking loose in the repo mkts! Somebody is short on viable securities or their money is not dollar for dollar good." Now? A yawn.
 
jed turtle

jed turtle

a brother in the Lord
Can somebody translate any of that for me? I don’t have the foggiest idea what repo overnight even means much less what the implications are. If I go on a Road trip next week, will the credit card stop working, will the gas stations shut down, will I have to walk 1200 miles to get back home?
 
hiwall

hiwall

Has No Life - Lives on TB
jed turtle said:
will I have to walk 1200 miles to get back home
Click to expand...
Yes. Wear comfortable shoes.

Banks often need extra money just for a day. They would lend each other money and get paid back the next day. Then a couple years ago, the banks stopped trusting each other and none wanted to lend money to the others. Then The Federal Reserve stepped in and started lending money over night to the banks who needed it. This had not been done before. This went on for a while then pretty much stopped.

Then a couple months ago the Fed again started lending this money over night to banks again. Now the amount has escalated to bizarre amounts of money.
What does it mean? Who knows but I think it is a bad sign. Its like seeing a big puddle of oil under your car.
 
T

Techwreck

Veteran Member
Just one more sign of increasing imbalance in the money rotation.

Every digit of debt the Fed creates gets leveraged into lots more digits on others' asset columns.

The Central Banks' ability to keep the plates spinning and bubbles expanding is impressive, but the inevitable unwind will be quite a reset for those who confuse price and value.
 
hiwall

hiwall

Has No Life - Lives on TB
Here is the Fed total asset chart. As you can see in the chart, it supposedly went down from a week ago.

1.1.JPG
 
T

Troke

On TB every waking moment
I got the impression the Fed was 'lending' money to the banks whether they wanted it or not. That was how they were covering the spending. But there is a limit that the banks can handle and we are close to that.

So what does the Fed do now? Thinking about that does not lead me to a tranquil mind.

BTW, all the bitching and moaning about the Fed?
If Congress balanced the budget, would that not ease the b&m about the Fed?

In other words, the Fed is where it is because of the profligacy of the Congress.
 
Hfcomms

Hfcomms

EN66iq
This type of monetary system is designed to fail from the inception Troke. They knew it back in 1913 when the Fed came into being. A debt based fiat currency system depends on more and more debt being created to keep the system going. The time eventually comes where even the interest on the debt can no longer be repaid.

If liquidity dries up no new debt can be created and the system implodes on itself therefore the repo injections. We are at the end of this system now and why Biden needs to go from Trump’s 4.6 trillion dollar budget to the 6.2 trillion he wants. We are at vertical inflection in monetary growth and it’s all going to come apart. I won’t argue with congress being irresponsible but it’s beyond their ability to control the beast they helped to create.
 
Samuel Adams

Samuel Adams

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Hfcomms said:
This type of monetary system is designed to fail from the inception Troke.
Click to expand...

It was also designed to divest the entire country, landmass and population, of their substance; lawful coin, land, title and chattels.

Senator Charles Lindbergh, Sr. warned staunchly against it, noting that it would create the largest trust on earth.

It is the fact now that there are almost no lawful landowners left, only tenants renting trust property from the government, who has as its principal the Federal Reserve shareholders.

They couldn’t drive Americans from America, so they used a private trust and fiat paper to remove Americans from there land titles, and all of America’s debt load and bureaucratic nightmare entanglements stem from the existence of that cestui que trust.

Let’s hope the Cosmic Referee can find some error in their construct, that “we” might have a lawful leg to stand on when trial by combat ensues.
 
jed turtle

jed turtle

a brother in the Lord
Hfcomms said:
This type of monetary system is designed to fail from the inception Troke. They knew it back in 1913 when the Fed came into being. A debt based fiat currency system depends on more and more debt being created to keep the system going. The time eventually comes where even the interest on the debt can no longer be repaid.

If liquidity dries up no new debt can be created and the system implodes on itself therefore the repo injections. We are at the end of this system now and why Biden needs to go from Trump’s 4.6 trillion dollar budget to the 6.2 trillion he wants. We are at vertical inflection in monetary growth and it’s all going to come apart. I won’t argue with congress being irresponsible but it’s beyond their ability to control the beast they helped to create.
Click to expand...
Anyone have any idea when “it’s all going to come apart”? Next month, next week? Usually those “vertical inflections” (exponential rocket launch-type lift-offs on the graphs) don’t take very long nor stay in the stratosphere long either before coming back down with what is usually termed as a “crash”.
 
Hacker

Hacker

Computer Hacking Pirate
jed turtle said:
Anyone have any idea when “it’s all going to come apart”? Next month, next week? Usually those “vertical inflections” (exponential rocket launch-type lift-offs on the graphs) don’t take very long nor stay in the stratosphere long either before coming back down with what is usually termed as a “crash”.
Click to expand...

I've put this out a couple of times. In short, it's falling apart now.

If we remain on our present course, the inflation will worsen, substantially into hyperinflation, and very quickly. The U.S. government will be unable to pay its bills as the inflation will outstrip government payments - thus, the government will not be able to pay its bills without borrowing yet more.

If they attempt to reign in inflation, they will need to raise interest rates, and the U.S. government will not be able to service the debt at the higher interest rates.

In other words, currency collapse will happen within (in my opinion) just the next few months.
 
T

Troke

On TB every waking moment
Samuel Adams said:
It was also designed to divest the entire country, landmass and population, of their substance; lawful coin, land, title and chattels.

Senator Charles Lindbergh, Sr. warned staunchly against it, noting that it would create the largest trust on earth.

It is the fact now that there are almost no lawful landowners left, only tenants renting trust property from the government, who has as its principal the Federal Reserve shareholders.

They couldn’t drive Americans from America, so they used a private trust and fiat paper to remove Americans from there land titles, and all of America’s debt load and bureaucratic nightmare entanglements stem from the existence of that cestui que trust.

Let’s hope the Cosmic Referee can find some error in their construct, that “we” might have a lawful leg to stand on when trial by combat ensues.
Click to expand...
It is the fact now that there are almost no lawful landowners left, only tenants renting trust property from the government, who has as its principal the Federal Reserve shareholders.

Care to amplify that a tad? I know more than one who has no mortgage and thinks they own their property. I am one.
 
Southside

Southside

Has No Life - Lives on TB
Troke said:
It is the fact now that there are almost no lawful landowners left, only tenants renting trust property from the government, who has as its principal the Federal Reserve shareholders.

Care to amplify that a tad? I know more than one who has no mortgage and thinks they own their property. I am one.
Click to expand...
You "Own" it as long as you pay taxes.
There are types of land titles out there that are not taxed. THAT is what we all should have. We don't.
THIS IS Amerikka!
 
hiwall

hiwall

Has No Life - Lives on TB
Troke said:
It is the fact now that there are almost no lawful landowners left, only tenants renting trust property from the government, who has as its principal the Federal Reserve shareholders.

Care to amplify that a tad? I know more than one who has no mortgage and thinks they own their property. I am one.
Click to expand...
Property taxes are forcing many people to sell. My property taxes went up 72% last year. Nothing to stop those taxes from going up that much or more every year.
In case you are wondering, my income did Not go up 72% last year.
 
Kris Gandillon

Kris Gandillon

The Other Curmudgeon
_______________
If your property taxes were $1,000 then they went up to $1,720. Your income didn't have to go up 72% to cover that (I hope!). However, if your property taxes were $10,000 and they are now $17,200, that would definitely leave a mark.
 
D

DoomBuggy

Veteran Member
Troke said:
It is the fact now that there are almost no lawful landowners left, only tenants renting trust property from the government, who has as its principal the Federal Reserve shareholders.

Care to amplify that a tad? I know more than one who has no mortgage and thinks they own their property. I am one.
Click to expand...

You actually own nothing in this world. You may "own" your house as the mortgage has been paid off, but the gov owns the land it sits on and makes you pay ever-increasing property taxes until you die. Don't/can't pay your property taxes, they take their property and your house. Sell it and they hit you with taxes on capital gains.

It amazes me how people WITH mortgages think they "own" their house. The bank owns it for the 30 years or however long it takes to pay it off. Once the current housing moratorium is cancelled, those same banks are going to repo all those homes where months of mortgage payments haven't been made and there will be millions more homeless than we have already. God help us.
 
hiwall

hiwall

Has No Life - Lives on TB
Dozdoats said:
Troke still steadfastly believes it is possible to pay off a debt with another debt.
Click to expand...
Our government has been doing that for many years.
Many people do not realize that US corporations are doing the same thing. Sell corporate bonds at very low interest rates to pay off older loans. Corporate debt has never been higher than it is now. Amazon recently sold 10 billion dollars of new bonds.
 
T

Troke

On TB every waking moment
Southside said:
You "Own" it as long as you pay taxes.
There are types of land titles out there that are not taxed. THAT is what we all should have. We don't.
THIS IS Amerikka!
Click to expand...
There are types of land titles out there that are not taxed. THAT is what we all should have.

And what kind of title is that?
 
Hfcomms

Hfcomms

EN66iq
jed turtle said:
Anyone have any idea when “it’s all going to come apart”? Next month, next week? Usually those “vertical inflections” (exponential rocket launch-type lift-offs on the graphs) don’t take very long nor stay in the stratosphere long either before coming back down with what is usually termed as a “crash”.
Click to expand...


When it happens it happens, and until it happens it hasn’t happened yet. However, all the signs and history of fiat currency along with the actions of monetary authorities indicate that this present system is in it’s death throes. As hard as it is to contemplate pretty soon we will look back and think that these were the good old days.
 
Samuel Adams

Samuel Adams

Has No Life - Lives on TB
Oddly enough, our county state’s attorney just told me the same thing.....day before yesterday.

There should be more.

A lot more.
 
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jed turtle

jed turtle

a brother in the Lord
Ok, I am much closer to cancelling a long trip this coming week because of this thread in particular.
any of various events that would be considered black swans that would leave me stranded 1100 miles from home seems to be rising exponentially in all categories, not just financial. Long way to walk home if there is a breakdown of the credit card system, gas supply, etc. getting the garden in is more important than ever, even a much needed change of location, which could unexpectedly become permanent...
 
hiwall

hiwall

Has No Life - Lives on TB
jed turtle said:
Ok, I am much closer to cancelling a long trip this coming week because of this thread in particular.
any of various events that would be considered black swans that would leave me stranded 1100 miles from home seems to be rising exponentially in all categories, not just financial. Long way to walk home if there is a breakdown of the credit card system, gas supply, etc. getting the garden in is more important than ever, even a much needed change of location, which could unexpectedly become permanent...
Click to expand...
We are likely a long time away from a major event.
 
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