It was supposed to usher in a market crisis that would prompt the Fed to launch QE4 according to repo guru Zoltan Pozsar . In the end, the preemptive liquidity tsunami unleashed by the Fed in mid-December which backstopped just shy of $500 billion in liquidity, proved enough to keep any latent repo market crisis at bay. The year's final overnight repo operation, which the Fed expanded to as much as $150 billion ended up being just 17% subscribed, as Dealers submitted only $25.6 billion in securities ($15.2BN in TSYs, $2BN in Agencies, $8.35BN in MBS) in the year, and decade's, final overnight repo meant to bridge the financial system's short-term funding needs into 2020. As a result of the Fed's massive, preemptive liquidity backstop, the overnight G/C term repo rate quickly dropped back to a subdued, and quite normal, 1.55% after starting the day north of 1.80%. One thing is certain: last New Year's firework, which saw the overnight G/C repo rate s...
"La verità passa per tre gradini: prima viene ridicolizzata, poi viene contrastata, infine viene accettata come ovvia" (A. Schopenhauer)