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Banks/FED and reverse Reos

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    #1

    Banks/FED and reverse Reos

    marketwatch.com
    https://www.marketwatch.com/story/fed-sees-record-756-billion-demand-for-reverse-repo-program-expect-it-to-hit-1-trillion-say-rates-strategists-11623961989



    What does this mean? Nothing seems to make sense anymore. Appears to be so much money the banks can't do anything with it so they give it back to the FED reserve. But then precious metals tank because?

    Besides everyone wild guessing, does anyone have a clue what's happening?
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    #2
    I work for a bank and just spent a week and a half at a bank conference talking to tons of other bankers. The banks are stupid flush with deposits right now. A ton of the PPP money and the stimulus checks just went straight to deposits and are sitting at the banks. Just a fraction of that money was spent. The options the banks have are to 1) make a ton more loans (easier said than done) or 2) get yield by investing it in their securities portfolio. There is little to no yield to be had with investments right now so the Fed throwing up 5 bps is getting a lot of inflow of funds.

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      #3




      These may be hard to read but 36% of the first round of stimulus was saved and 45% of the second was saved. That’s a ton of cash. Add that on top of all the PPP dollars the govt gave away and it’s an insane amount of dollars just sitting on deposit.

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        #4
        So there's too much money LOL

        Does this mean they will raise rates to fight inflation? Or does this override inflation and now they won't raise rates?

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          #5
          Originally posted by Throwin Darts View Post
          I work for a bank and just spent a week and a half at a bank conference talking to tons of other bankers. The banks are stupid flush with deposits right now. A ton of the PPP money and the stimulus checks just went straight to deposits and are sitting at the banks. Just a fraction of that money was spent. The options the banks have are to 1) make a ton more loans (easier said than done) or 2) get yield by investing it in their securities portfolio. There is little to no yield to be had with investments right now so the Fed throwing up 5 bps is getting a lot of inflow of funds.
          My deposits are up 40% in the last 12 months and loan portfolio and loan demand has been falling, one year jumbo investment CDs are 0.10-0.20%... It sucks to be in finance right now with this corporate welfare rates....

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            #6
            Originally posted by RiverRat1 View Post
            So there's too much money LOL

            Does this mean they will raise rates to fight inflation? Or does this override inflation and now they won't raise rates?

            I don’t think there’s any chance they raise rates until 2023 at the earliest.

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              #7
              Originally posted by Throwin Darts View Post
              I don’t think there’s any chance they raise rates until 2023 at the earliest.
              Agreed. I saw one article that mentioned Q4 2022, but I bet it'll be after that.

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                #8
                Originally posted by Throwin Darts View Post
                I don’t think there’s any chance they raise rates until 2023 at the earliest.
                I sure hope you are wrong......... Come on inflation!!!!

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