Maris Research

Treasury Yields Steady As Policymakers Consider Ways To Improve Liquidity

Share on facebook
Share on facebook
Share on twitter
Share on linkedin

The minutes of the late-April meeting of the policymaking Federal Open Market Committee, however, opened another possible change in the market for Treasuries—the permanent extension of the Foreign and International Monetary Authorities (FIMA) Repo Facility, which is currently set to expire in September.

The facility was set up at the end of March 2020 to relieve selling pressure from foreign central banks and other monetary authorities by accepting Treasury securities for repurchase agreements, giving them access to cash without having to sell.

According to the FOMC minutes:

Making the facility permanent might be a good idea, the policymakers concluded.

The Treasury Borrowing Advisory Committee went a step further in a presentation last month and suggested a permanent facility for a wide range of U.S. investors to enter repo agreements with the Fed. This type of facility would enable dealers to meet demand for liquidity in times of stress while relieving pressure on Treasuries.

Another idea floating around is to mandate a central clearing facility for Treasuries. This idea, championed by Stanford economist Darrell Duffie, would ease the capital restraints on bank-affiliated dealers, enabling them to increase the supply of liquidity, or eventually cut down on dealer intermediation.

Both ideas were among those proposed in a December

... continue reading 3rd party author's post at source website


Can't Get Enough Freebies? Subscribe to our Newsletter!

We will send you free research and analysis summarized at the end of each month.

Leave a Comment

Newsletter Sign up

Top Posts


What is Flywheel?


More Articles.

Yahoo Finance

Fed Throws China a Curveball Just When It Seeks Stability

(Bloomberg) — China’s capacity to maintain stability in its financial markets is being tested by the Federal Reserve’s sudden hawkish shift. Beijing has repeatedly voiced concern that liquidity-fueled bubbles overseas would burst when monetary conditions finally started to tighten. Bullish speculation domestically already prompted intervention by Chinese authorities, particularly in commodities. As such, a move

Read More »

Get content like this sent directly to your inbox!

Follow OnceBurned

Share on facebook
Share on twitter
Share on linkedin
Scroll to Top