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  1. #1
    Member
    Join Date
    Nov 2011
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    Coral Springs, Florida
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    10,793

    Overnight Lending Troubles

    Something seems wrong when the overnight lending rate between banks spikes to 10%. I have not heard much about it but it seems like a troubling sign that banks are short of cash. Is the Repo market about to come unglued like it did during the financial crisis? Are the banks sitting on a lot of bonds or assets and just not enough cash causing a cash shortage? I really don't understand it but I have alot of money sitting in a treasury money market fund and I know they are involved in Repos so I wonder if it could break the buck if there is some kind of default or lockup in the REPO markets. May just be time to start rolling into 1 month treasuries.

    Anybody have a good explanation or understanding about what is going on with the banks?

  2. Stocks/Investments Moderator boneil's Avatar
    Join Date
    Jul 2010
    Location
    Aberdeen, MD
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    12,147
    #2
    I don't think anybody has a good explanation on the repo market or negative rates..............seams like we are starting to see financial issues that aren't easily explainable. The financial crisis started with derivatives of derivatives that nobody had a good understanding of either
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