The Fed is taking Treasurys out of the market through QE purchases and putting them right back in via the RRP
The heavy use of the o/n RRP facility tells us that foreign banks too are now chock-full of reserves.
Banks don t have the balance sheet to warehouse any more reserves at current spread levels.
As for the immediate market implications they are even more ominous: either the Fed will have to hike the IOER or rates will soon go negative. Worse, with the Fed still planning to do at least $1 trillion in QE even assuming a December taper, and potentially as much as $2 trillion based on the latest just released Fed forecast , there is simply no place to park all of these reserves. And while Powell & Co pretend that they can continue business as usual for years to come, the repo market is not only cracking but banks, full to the gills with inert reserves and which increase by $30 billion every week, are on the verge of pulling a Mr Creosote.
Rescue officials urge hikers to exercise caution as weather warms
and last updated 2021-05-04 23:15:37-04
POWELL COUNTY, Ky. (LEX 18) â After a year of doing puzzles inside and trying new recipes, many people are yearning for a more normal spring and summer: a life outside their homes.
The warm weather has drawn many people out to the Red River Gorge, but it s also prompted a warning from emergency officials. All it takes is just a misstep, said Jeremy Urekew with RedStar Wilderness EMS. The rock formations are very slick and slippery.
Urekew is currently in Florida working at a COVID-19 vaccination site, but his colleagues back in Powell County have been busy responding to reports of hikers in danger. Over the last week, the Powell County Search and Rescue team has responded to at least four calls in which hikers were hurt or lost.
Johnson and Johnson Vaccine Greenlight Turns Markets Green
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Last week was like one of those good old-fashioned donnybrooks when two guys just went toe to toe. The ups and downs of the market took their cue from various inputs from earnings and that bombshell on capital gains taxes.
It reminded me of one of my favorite childhood toys; Rock ‘Em Sock ‘Em Robots. The fighting back and forth eventually saw a big bounce on Friday , although not enough to prevent a down week for major indices.
Still, you had to be impressed with another Friday rally. I must mention that the net volume was extremely light, and that bothers me. That said, the market rallied after-hours on news the Johnson and Johnson (JNJ) vaccine has been given the green light.
Powell s Plea
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Federal Reserve Chairman Jerome Powell must feel like I used to when my mom would ask if I had gone into the cookie jar. Not taking no for an answer, I was always compromised by the sound that ceramic jar made even when I thought I was lifting the lid straight up.
She would ask again and again, and no matter how incredulous, she just didn’t believe me.
For different reasons, the market is still not convinced Powell & Co can keep rates at current levels for as long as promised. Are they hearing something akin to that subtle noise that cookie jar made or is it something much louder?
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