/biz/ - Business & Finance

I've figured out this reverse repo market explosion. Everyone saw this interest rate issue coming that took down Silicon Valley Bank where long dated assets decrease in value. So the fed essentially turned the reverse repo market into a money market fund where instead of buying long dated treasuries with huge interest rate risk the fed started allowing eligible orgs to do reverse repos that pay the same rate with none on the term length risk. It's currently paying 4.5% annualized and the term length is 1 day to 1 week.. so it was like a huge hidden give away. Thoughts?

I think I've finally found out the deal with the reverse repo market. Everyone saw this interest rate issue coming that took down Silicon Valley Bank where long dated assets decreases in value. They didn't want to buy treasuries when they knew the interest rate would go up decreasing the value so the fed allowed them to just do reverse repo market at similar rate risk free and that's how we get to 2.5 trillion. It's like a huge giveaway the current yield is ~ 4.5% and now they don't have to deal with the term length risk at all if they can access it. Thoughts?