Fed’s Repo Op Is Undersubscribed, Suggesting Dealers at Capacity
- Participants submitted $18 billion in bids for offering
- This is the third straight undersubscribed term action
This article is for subscribers only.
The Federal Reserve Bank of New York’s operation to inject cash into the financing system over the end of the year was undersubscribed on Thursday, a possible indication that dealer balance sheets are nearing capacity.
Primary dealers submitted $18 billion in bids for the Fed’s 14-day term repo operation, which matures Jan. 9. That was less than the $35 billion on offer and the third term operation aimed at year-end funding that has come in under the maximum amount. The Fed so far has injected roughly $203 billion and could offer as much as $260 billion more next week for the turn.