“Massive… Huge… Largest Ever”: Fed Will Flood Market With Gargantuan $500 Billion In Liquidity To Avoid Year-End Repo Crisis
In September we wrote this with regard to the “repo crisis”,
“All one has to know is that federal debt is skyrocketing and that big banks (dealers) are required by law to buy it. So the government helps out by buying back the same debt.”
This also means that by Jan 14, the Fed’s balance sheet would have grown by a cumulative $365BN in “temporary” repos, and together with the expanded overnight repos, and the $60BN in monthly TBill purchases, and by mid-January, the Fed’s balance sheet, currently at $4.066 trillion, will surpass its all time high of $4.5 trillion!
The question then is whether this will be sufficient to refute the repo Doomsday … one which was supposed to launch QE4, or will the Fed’s gargantuan liquidity injection still not be enough and lead to a collapse in the repo market.