๐จ ๐๐๐๐๐๐ฟ๐๐๐ ๐ผ๐๐๐๐: ๐๐๐๐ฃ๐จ ๐ค๐ ๐๐ฉ๐ง๐๐จ๐จ ๐๐ฃ ๐ฉ๐๐ ๐๐๐ฃ๐๐ฃ๐๐๐๐ก ๐๐ฎ๐จ๐ฉ๐๐ข ๐
Liquidity is the essential fuel for the sustainability and growth of risk assets. We are carefully monitoring the first signs of tension in the financial system: a slowdown or a drying up of this "lifeblood" is a predictive indicator of a potential slowdown or reversal for the markets. The resilience of risk assets now depends more than ever on the fluidity of cash in circulation. ๐ง
๐๐๐ ๐๐๐ฟ'๐จ ๐๐ข๐๐ง๐๐๐ฃ๐๐ฎ ๐๐ฃ๐ฉ๐๐ง๐ซ๐๐ฃ๐ฉ๐๐ค๐ฃ ๐๐ฃ ๐ฉ๐๐ ๐๐๐ฅ๐ค ๐๐๐ง๐ ๐๐ฉ ๐ฆ
Last week, the Federal Reserve (Fed) of the United States was forced to execute a crucial rescue operation, intervening with a massive injection of liquidity of approximately $50 billion to avert a potential blockage in the interbank system.
This maneuver, the largest overnight repurchase operation since the 2020 pandemic crisis, aimed to defuse the acute liquidity stress that had manifested in the markets.
The immediate cause of the tension was a marked shortage of cash available for very short-term loans (repos).
This shortage drove repo rates higher, as the supply of funds had drastically reduced due to two structural reasons:
โข ๐๐ช๐๐ฃ๐ฉ๐๐ฉ๐๐ฉ๐๐ซ๐ ๐๐๐๐๐ฉ๐๐ฃ๐๐ฃ๐ (๐๐): The Fed's balance sheet reduction program was draining bank reserves.
โข ๐๐ง๐๐๐จ๐ช๐ง๐ฎ ๐ผ๐๐๐ช๐ข๐ช๐ก๐๐ฉ๐๐ค๐ฃ: Due to the Shutdown, the Treasury is still collecting revenue but has reduced spending. The increase in the cash deposits of the Treasury Department (TGA) had further withdrawn liquidity from the system.
With bank reserves falling below the adequate threshold, the Fed utilized the Standing Repo Facility (SRF) to inject the necessary cash.
The operation was designed to restore repo rate fluidity to normal levels, increase the supply of funds for primary dealers and banks, and, most importantly, prevent a potential freezing of the vital short-term money market.
๐๐ง๐ช๐๐๐ฃ๐๐ ๐๐ฃ๐ ๐๐๐๐๐ก๐๐ฃ๐๐ ๐ผ๐๐๐๐ ๐
While the event is localized and should not trigger panic, it is essential to adopt increased caution. In the coming weeks, our focus must remain on the evolution of liquidity movements.
๐๐ ๐ฎ๐ค๐ช ๐๐ง๐ ๐ช๐ฃ๐๐๐ข๐๐ก๐๐๐ง ๐ฌ๐๐ฉ๐ ๐ฉ๐๐๐จ๐ ๐๐ค๐ฃ๐๐๐ฅ๐ฉ๐จ, ๐๐ค ๐ฃ๐ค๐ฉ ๐ฌ๐ค๐ง๐ง๐ฎ. ๐ผ ๐๐ค๐ข๐ฅ๐ง๐๐๐๐ฃ๐จ๐๐ซ๐ ๐๐๐๐ฅ ๐๐๐ซ๐ ๐๐ญ๐ฅ๐ก๐๐๐ฃ๐๐ฃ๐ ๐๐ก๐ก ๐ฉ๐๐ ๐๐ก๐๐ข๐๐ฃ๐ฉ๐จ ๐ฉ๐๐๐ฉ ๐๐๐ฉ๐๐ง๐ข๐๐ฃ๐ ๐ข๐๐ง๐ ๐๐ฉ ๐ก๐๐ฆ๐ช๐๐๐๐ฉ๐ฎ ๐ฌ๐๐ก๐ก ๐๐ ๐๐ซ๐๐๐ก๐๐๐ก๐ ๐จ๐ค๐ค๐ฃ! ๐
๐ฟ๐ค๐ฃโ๐ฉ ๐๐ค๐ง๐๐๐ฉ ๐ฉ๐ค ๐๐ค๐ฅ๐ฎ ๐ข๐ฎ ๐ฅ๐ค๐ง๐ฉ๐๐ค๐ก๐๐ค!
Thank you!
$BTC$ETH$GOLD$SPX500... Show More
QT has technically not started yet (1 December).
This spike was more due to month-end demand on 31 October, and the repo market worked just as intended (to provide liquidity when needed). It was thus more of a feature rather than a bug, further evidenced my that the repo usage was down to less than USD... Show More
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Thu Dec 11 2025 08:50:28 GMT+0000 (Coordinated Universal Time)
