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IPFS News Link • Federal Reserve

In Stunning Development, Dealers Run Out Of Securities To Use In Fed Repo Operations

•, Tyler Durden

Then, after the Fed launched QE across the entire curve and expanded it to include MBS, the Fed's monetary police became outright bizarre: on one hand the Fed was offering to buy Treasurys and MBS held by Dealers (at a hefty, unknown premium to market), on the other it was offering Dealers to park those securities at the Fed either overnight or on a term basis in exchange for cash while incurring modest capital charges.

After all, why would anyone pick repo over QE in the current market was a total mystery.

Today's other repo operation, the $500BN overnight repo saw just $1.5BN in TSYs submitted (the remaining $5.25BN were MBS) into the $500BN operation.