The Federal Reserve is flooding the market again, and there's no stopping it!
The Federal Reserve has opened the faucet wider, injecting $6.8 billion in liquidity into the market today. When calculated over ten days, that's $38 billion, which is quite astonishing.
It’s clear to anyone paying attention that the core of this operation is the treasury repurchase agreements. In simple terms, the Federal Reserve is directly injecting money into the financial system by purchasing treasury bonds.
But the key point is that the current repurchase amount of $40 billion is about to hit its limit, and everyone is watching the Federal Reserve's next move closely.
Let’s note that this approach by the Federal Reserve is originally intended to stabilize the market, but it also carries the risk of excessive liquidity. The market is becoming increasingly dependent on it, and if the Federal Reserve wants to withdraw in the future, it may trigger significant turbulence.
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