Term Repo Record Oversubscribed As Market Liquidity Craters
Yesterday, when discussing the most oversubscribed overnight term repo operation yet, in which dealers scrambled to obtain $111.5BN in liquidity from the Fed's $100BN overnight repo operation, we said that it was "the second day in a row the overnight funding repo operation was oversubscribed (and it is virtually certain that tomorrow's downsized term-repo will be oversubscribed as well)."
We were right, because moments ago not only did the Fed announce that the latest 14-day term repo was indeed oversubscribed, but it was in fact the most oversubscribed term-repo on record, surpassing even the funding needs indicated at the start of the repo crisis last September.
While the Fed tapered the size of the term-repo operation from $25BN to $20BN as we entered March, the demand for the liquidity it unlocks has not only refused to go down, but has in fact soared, and rose to an all time high of $72.6BN consisting of $45.25BN in Treasurys, $2.5BN in Agency and $24.8BN in MBS tendered to the Fed. As a result, with the full amount of eligible liquidity, or $20BN, released, this meant that today's term repo operation was 3.6x oversubscribed - the most on record. This continuing liquidity crunch is bizarre, as it means that not only did the rate cut not unlock additional funding, it actually made the problem worse, and now banks and dealers are telegraphing that they need not only more repo buffer but likely an expansion of QE… which will come soon enough, once the Fed hits 0% rates in 2 months and restart bond buying.
Will that be enough to stabilize the market? We don't know, but in light of the imminent corona-recession, on Tuesday Credit Suisse's Zoltan Pozsar repo guru published a lengthy piece whose conclusion - at least on the liquidity front - is that the Fed should "combine rate cuts with open liquidity lines that include a pledge to use the swap lines, an uncapped repo facility and QE if necessary."
In short, a liquidity avalanche is coming to prevent a market crash. It's only a matter of time.
https://www.zerohedge.com/markets/term-repo-record-oversubscribed-market-liquidity-craters
https://www.bloomberg.com/markets/stocks/futures
https://www.marketwatch.com/investing/bond/tmubmusd10y
Morning Look at the Sky
SAM323 USAF G5 NW from JBA
R01052 USMC C-560 East from JBA
R90104 and R01O51 USMC C-560's NW from Dobbins ARB Smyrna, Ga
USMC busy with the Citation flights already
give me a few minutes. ADS-B is slow taody
Nothing Mil switched on at present over Oz. Commercial seems normal-cap
A medical flight around Adelaide about it.
good morning B and how are you today?
Ex-Barclays Traders Made to Pay $1.6 Million in Euribor Case
Two former Barclays Plc bankers were ordered to pay over 1.2 million pounds ($1.6 million) in costs to prosecutors after being found guilty of rigging a key benchmark interest rate.
Colin Bermingham and Carlo Palombo were convicted of manipulating Euribor rates a year ago. Bermingham was ordered to pay 300,000 pounds in prosecution costs within 24 months, while Palombo must pay 725,000 pounds.
A London judge also ordered Palombo to pay another 182,000 pounds within three months or face an additional 30 months in jail. He’s currently serving a four-year prison sentence for rigging Euribor, while Bermingham is serving five years.
Bermingham, Palombo ordered to repay prosecution costs
Both men were convicted last year of rigging Euribor
Carlo Palombo and Colin Bermingham
Carlo Palombo and Colin Bermingham
Source: Bloomberg
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Two former Barclays Plc bankers were ordered to pay over 1.2 million pounds ($1.6 million) in costs to prosecutors after being found guilty of rigging a key benchmark interest rate.
Colin Bermingham and Carlo Palombo were convicted of manipulating Euribor rates a year ago. Bermingham was ordered to pay 300,000 pounds in prosecution costs within 24 months, while Palombo must pay 725,000 pounds.
A London judge also ordered Palombo to pay another 182,000 pounds within three months or face an additional 30 months in jail. He’s currently serving a four-year prison sentence for rigging Euribor, while Bermingham is serving five years.
The men were jailed for their role in efforts to manipulate the Euro interbank offered rate, which is related to trillions of dollars worth of loans and derivatives. They were the last two convictions in the Serious Fraud Office’s seven-year investigation into rate-rigging allegations.
Lawyers for the men didn’t respond to requests for comment.
Palombo worked as a junior trader under Philippe Moryoussef, who was also convicted for manipulating Euribor. Moryoussef worked with a friend, Christian Bittar, at Deutsche Bank AG, in the scheme. Bittar, a star trader who earned a $120 million bonus in 2008 alone, went to jail after pleading guilty to fraud charges in 2018.
Moryoussef, who refused to return to the U.K. for the trial, was convicted in absentia in 2018. The Frenchman was sentenced to 8 eight years in prison, and ordered to pay 675,100 pounds. Bittar was ordered to pay 2.5 million pounds, the SFO said in 2018. Working with Moryoussef was Palombo’s first job in banking. In the 2018 trial, he made headlines comparing his job to someone working for McDonald’s.
“As ridiculous as it sounds, a coffee boy at Barclays gets paid 400,000 pounds a year,” he told the court.
Bermingham, on the other hand, was one of the most experienced people on the trading floor. His lengthier sentence took into account that he brought colleague Sisse Bohart into the conspiracy. She was acquitted of the charges last year.
https://www.bloomberg.com//news/articles/2020-03-05/ex-barclays-traders-ordered-to-pay-1-6-million-in-euribor-case
Any time the Futures are down (on the DOW) -300 or so it usually means this. They can move the Futures mkts very easily.
https://finance.yahoo.com/quote/%5EDJI
a mess in that barclays one.
>5ee831 (41)