|Day's Range||2.2210 - 2.2580|
|52 Week Range||1.9050 - 3.4550|
U.S. Treasury yields mostly lower Friday as investors eye developments on Brexit ahead of Parliament’s vote on the weekend.
U.S. Treasury yields fell Wednesday after a lackluster retail sales data suggest weakness in manufacturing may be spilling over into other areas of the economy.
Strains in short-term lending markets popped up again on Wednesday as the cost of borrowing funds overnight in return for high-quality collateral, or the repo rate, shot up on Wednesday. Hedge funds and banks use the repo market to finance their balance sheets and trading positions. The overnight repo rate spiked as high as 2.26%, according to one estimate. This compared with the effective fed funds rate, which stood at 1.90% on Oct. 15. The repo rate usually closely tracks the central bank's benchmark interest rate as they both are considered sources of short-term borrowing. Repurchasing agreements of $75 billion by the Federal Reserve was fully taken up for the first time since Sept. 25. Since last month, the central bank has looked to relieve pressures in funding markets by offering regular injections of liquidity and announcing monthly purchases of $60 billion Treasury bills at least through the second quarter.
U.S. Treasury prices fall Tuesday, pushing yields higher, after at least a truce in the U.S. - China trade war last Friday and as hopes for a Brexit deal rise
The New York Fed said it wouldextend its schedule of overnight and more longer-term repurchasing agreement operations. It would continue to offer overnight repos of at least $75 million every day through Nov. 4. And it planned to carry out longer-term repos ranging between 6 days to 15 days through Oct. 29. In a previous notice, the Fed has said it would conduct repos until Oct. 10. The central bank moved into the spotlight after the overnight repo rate, or how much hedge funds and banks have to pay for short-term borrowing, rose so high that the Fed's benchmark interest rate pushed above its target range. The central bank was forced to step in to contain the stresses in funding markets, and has since lent funds to cash-starved corners of the financial system through regular repo operations.
The managers of the TIAA-CREF Emerging Markets Debt Fund have few limitations on where they can look for yield and profits.
The New York Federal Reserve showed on its website that it planned to enlarge the size of its repurchasing operations for Thursday, as part of its move to temporarily inject cash into short-term funding markets. The central bank increased its overnight repos to $100 billion from $75 billion, and its 14-day repos to $60 billion from $30 billion. It's not clear if the increase to the offering sizes will apply to repo operations beyond Thursday. Recent repos by the Fed have been oversubscribed, suggesting pressure on funding markets has yet to subside. Repo traders say demand for cash is expected to spike heading into Sept. 30, the end of the quarter. The New York Fed's interventions come after the overnight repurchasing rate briefly climbed to three times their usual levels of around 2% last week. The repurchasing rate is how much banks and hedge funds pay to borrow for a short period of time in return for collateral like Treasurys.
The New York Fed offered $30 billion of 14-day repurchasing agreements to banks and investors on Tuesday, temporarily lending funds to those in need of short-term funding. The central bank had previously only conducted overnight repurchasing operations. The operation was twice oversubscribed, with $62 billion of bids placed. This could suggest pressure on short-term funding markets has yet to subside. The New York Fed's recent interventions into money markets comes after the overnight repurchasing rate shot up last week. The repurchasing rate is how much banks and hedge funds pay to borrow for a short period of time in return for collateral like Treasurys.
The New York Federal Reserve Thursday morning completed its third repurchasing operation, or repos, in as many days to stem spikes in crucial overnight funding market for financial institutions. The U.S. central bank carried out $75 billion of repos, with the Street submitting bids for $83.875 billion, sources said, providing liquidity for Wall Street dealers by temporarily buying securities. Earlier this week, a surge in the repurchasing rate, used by hedge funds and banks to fund their trading operations, pushed the fed-funds rate close to the top of its targeted range. The incident has stirred worries that the central bank is at risk of losing its grip over its benchmark interest rate. On Wednesday, Federal Reserve Chairman Jerome Powell said at a news conference that the central bank is likely to execute similar auctions and said he doesn't see the recent jump in overnight money-market rates on Monday and Tuesday as a "having implications for the broader economy, or for the economic outlook, nor for the our ability to control rates."
The New York Fed said it would conduct an overnight repurchasing operation for the third time this week at 8:15 a.m. Eastern on Thursday. The U.S. central bank will offer up to $75 billion of repos, temporarily buying securities from Wall Street dealers to inject liquidity into the system. Earlier this week, a surge in the repurchasing rate, used by hedge funds and banks to fund their trading operations, pushed the fed funds rate above its target range. Fed Chairman Jerome Powell said in a Wednesday press conference that the central bank would stand ready to use its current tools to address pressures in money markets.
The fed funds rate traded on Tuesday 5 basis points above the upper bound of its target range between 2.00% to 2.25%, according to Federal Reserve data released Wednesday morning. The recent climb in overnight repurchasing rates, used by hedge funds and other leveraged investors to finance their trading operations, has resulted in a knock-on increase in the fed funds rate. Since both are short-term sources of funding, a rise in the overnight repurchasing rate means that borrowers in fed funds have to pay up to attract investors. The fed funds rate pushing above its target range underlines analysts' concerns that the U.S. central bank is having trouble keeping its benchmark interest rate at its desired levels. The Fed launched $75 billion of overnight repos on Wednesday morning, in order to inject liquidity bank into the system and to bring the fed funds rate in line within its preferred range. This is the Fed's second repo operation this week.
The New York Fed held an overnight repurchasing operation for the second time this week on Wednesday morning. The U.S. central bank carried out the full $75 billion of repos, temporarily buying securities from Wall Street dealers to inject liquidity into the system. Earlier this week, a surge in the repurchasing rate, used by hedge funds and banks to fund their trading operations, pushed the fed funds rate close to the top of its targeted range. The incident stirred worries that the central bank is at risk of losing its grip over its benchmark interest rate.
Bond investor Jeffrey Gundlach said the Federal Reserve will take the disruption in short-term money markets as a warning sign.
The New York Federal Reserve bank said it was carrying out up to $75 billion worth of repuchase agreements, or repo, on Tuesday between 9:30 a.m. Eastern to 9:45 a.m. They said the move would help bring back the central bank's benchmark interest rate, or the federal funds rate, back to its target range of between 2% to 2.25%. Market participants have complained this week that a lack of liquidity in funding markets has pushed the fed funds rate above the interest rate on excess reserves, and that the central bank had lost its grip over short-term interest rates. Analysts say the repurchase operations will boost reserves at banks and help ease funding pressures.
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