Posts tagged 'repo rate'

A central bank is only as good as its target

FT Alphaville has discussed why western central banks might be in the midst of an existential crisis. The point rests on the fact that traditional policy transmission mechanisms appear to be dying.

Simply speaking, while most western central banks still target unsecured money market rates, the market itself has moved on. Unsecured short-term money market rates are no longer a representation of real financing costs. Trying to influence them thus makes little sense. It can achieve very little. Read more

Bund auction reaction, the liquidity case

Germany’s technically uncovered 10-year bund auction has stirred much debate.

To us, the mystery is the inconsistency. How do you reconcile low auction demand, with supposedly high demand for haven assets like bunds and the low or “special” repo rates in the German bond collateral market. Read more

The bund that broke the Bundesbank [Updated]

There is mystery afoot in the European bond market.

Or you could say, Professor Merkel has been found in the Bundesbank with the lead German bund. Read more