Fed Adds $58.15 Billion in Liquidity on Monday
October 21 2019 - 9:37AM
Dow Jones News
By Michael S. Derby
The Federal Reserve Bank of New York injected $58.15 billion in
overnight liquidity into financial markets.
The Fed accepted $50.95 billion in Treasurys, $500 million in
agencies and $6.7 billion in mortgage-backed securities.
Monday's operation by the Fed is part of an effort to help tame
volatility in short-term rate markets with temporary and permanent
injections of liquidity. Fed repo interventions take in Treasury
and mortgage securities from eligible banks in what is effectively
a loan of central bank cash, collateralized by dealer-owned
bonds.
On Friday, the Fed permanently added to its holdings with $7.501
billion in Treasury bill purchases, which are aimed at growing the
Fed's nearly $4 trillion in holdings. Also Friday, the Fed added
$56.65 billion in short-term liquidity, which expired Monday.
Short-term rate levels weren't elevated Friday, suggesting
markets weren't under any particular stress. The effective
fed-funds rate stood at 1.85%, in the middle of the 1.75% to 2%
range targeted by the central bank. The broad general collateral
rate, which governs banks' lending of securities and cash to one
another, stood at 1.85% as well, while the Secured Overnight
Financing Rate was 1.88%.
Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
October 21, 2019 10:22 ET (14:22 GMT)
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