Faber News Flow

Back in the summer of 2013, China's banking system was on the verge of collapse when its overnight repo rates briefly soared to the mid-20% range, prompting the central bank to take emergency intervention to avoid a funding freeze. As of this morning, the US is halfway there. After we reported yesterday that "something snapped" as chaos hit the report market, and the overnight repo rate exploded as high as 7% for a variety of reasons including: elevated UST supply, bloated dealer balance sheets and year-end regulatory constraints a banking system near reserve scarcity, investors selling bonds back to dealers, and banks and money-market funds to make their quarterly tax payment. ... on Tuesday this paniced funding shortage has intensified to never before seen levels, as overnight repo has now hit 10% and shows no signs of slowing. While specific prints are scarce as the bid/ask spread is a massive 2% at last check, Reuters has GC repo at 10%, while Bloomberg's own pric