"Repo" crisis … eyes turn to JP Morgan

The Repo crisis continues to end. While injections fell sharply with a low point on October 3 and "only" $ 33.5 billion requested, we went back to $ 38.5 billion on October 4, then to $ 47 billion on Monday, October 7, as you can see on this account. of the Fed.

It is in this context that we continue to wonder what can happen.

Reuters, which is a "serious" agency, talks about JP Morgan, as some rival banks and analysts estimate that changes in its $ 2.7 trillion balance sheet were a factor in the soaring US "repo" market. United.

Reuters recalls that "the rate on the repurchase agreement market of $ 2.2 trillion rose 10% on September 17, the demand for overnight liquidity from companies, banks and other borrowers having exceeded the supply ".

While this is not seen as a sign of distress, such as the fall of Bear Stearns and Lehman Brothers in 2008, this outbreak prompted the US Federal Reserve to pledge to lend at least $ 75 billion a day until to October 10 to ease the pressure.

Indeed, published data shows that JPMorgan has reduced by 158 billion dollars its liquidity in deposit with the Federal Reserve, by means of which it would have lent on the famous repo market, which represents a decrease of 57%.

Although JPMorgan's movements appear to have been logical responses to post-crisis interest rate trends and banking regulations, which have more limited than other banks, the data show that its conversion accounted for about a third of the decline in all Fed bank reserves during the crisis period.

For an analyst who wishes to remain anonymous, the amounts withdrawn by JP Morgan are an "aberration".

Nothing else.

Charles SANNAT

Source Reuters.com Agency Here