At the start of October, we pointed out something very troubling: the Fed's repo rate corridor, the anchor of the entire US financial system, broke and boy did it break as General Collateral surged almost 40 bps above the reverse repo facility rate, which is designed to serve as the upper range of the Fed's various overnight rates. The upper range, that is, except during month-end, and especially quarter-end, when banks window-dress their books by soaking up as much liquidity as they can get their grubby little hands on.
It is then that we see just how naked the liquidity emperor truly is. And on September 30, the emperor was fully naked, as shown in this Oct 1 chart below.
oops pic.twitter.com/M0CfWxV16t
— zerohedge (@zerohedge) October 1, 2024
