The Fed has guaranteed repo for 400 billion in two days: what happens on Wall Street?


Resident Canadian
Dec 1, 2020
Canada's Ocean Playground

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It is not the deep red numbers of the indices that are scary, but what moves under the track. After the 181.8 billion in reverse repo kindly guaranteed by the Fed at zero interest to 28 financial institutions yesterday, it was repeated today. Another $ 209.25 billion at 0% against 39 bidders . In fact, in two days the Federal Reserve "lent" about 400 billion dollars to interest-free banks and collateral whose real mark-to-market seems to be implicitly priced in the crashes in progress. Translated further, someone in the last 48 hours had to cover something .
The Fed has been buying up junk bonds and literally giving away money at 0% interested for over a year now. This is not the least bit surprising. Frankly, I'm amazed it's all lasted as long as it has.