Fed Injects Tens of Billions into Repo Mkt; Strong Bank Demand

The Federal Reserve continues to be busily injecting tens of billions of dollars of liquidity in the U.S financial system to calm markets, as it did the previous week, but banks were asking for more cash than the Fed was offering.

The Fed conducted a number of repo and two-week loan operations in response to a large request for cash by banks. The Fed said it would continue to do so daily through Oct. 10.

Tuesday the New York Fed offered $30 billion and received $62 billion in demand from banks offering collateral like Treasury and mortgage securities. It was the first time the Fed had offered multi-day loans after offering overnight loans. Later the Fed offered $75 billion in overnight loans and received demand of $80.2 billion.

Unsurprisingly, the NY Fed said Wednesday it would raise the size of scheduled operations after requests by banks for cash at offerings on Tuesday and Wednesday exceeded the amounts offered by the Fed.

Thursday the Fed jacked up the size of repo loans offered to $100 billion and $60 billion for the two-week offering. The latter offer was again oversubscribed. Banks asked for $72.75 billion in 14-day cash loans. On Friday, the NY Fed added $71.7 billion to the financial system through the repo markets, again to relieve funding pressure in mone...
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