Robin Wigglesworth
@robinwigglesworth.ft.com
Editor of FT Alphaville. Norwegian, despite the Harry Potteresque name.
I don’t think a failed auction is a real risk in the US, but I agree that the deficit and debt level basically means that repo has to expand. But that means that the Fed has in practice ceded the size of its balance sheet to the government, as Wang argues. fedguy.com/balance-shee...
Balance Sheet Dominance
Fed will end QT soon, but that won't stop the demand for repo financing. This will need to start reexpanding their balance sheet.
fedguy.com
November 8, 2025 at 9:55 PM
I don’t think a failed auction is a real risk in the US, but I agree that the deficit and debt level basically means that repo has to expand. But that means that the Fed has in practice ceded the size of its balance sheet to the government, as Wang argues. fedguy.com/balance-shee...
IIRC the main difference — secured lending versus outright sales and repurchases — was because of some weird legal issue. Finreg rules everything around us etc.
November 8, 2025 at 7:14 PM
IIRC the main difference — secured lending versus outright sales and repurchases — was because of some weird legal issue. Finreg rules everything around us etc.
Pretty sure the Fed has in fact moved to averages. But I think European banks haven’t (and possibly Canadian ones as well) and that is one of the reasons why the quarterly stresses persist, even though they are less acute.
November 8, 2025 at 7:12 PM
Pretty sure the Fed has in fact moved to averages. But I think European banks haven’t (and possibly Canadian ones as well) and that is one of the reasons why the quarterly stresses persist, even though they are less acute.
Eg I worry less about absolute size of Treasury market than how much is held in hands that are leveraged 10-50x through repo. Within living memory we have had a very nasty experience with what repo runs can cause, and this is a GFC-revealed vulnerability that we haven’t really addressed.
November 8, 2025 at 7:10 PM
Eg I worry less about absolute size of Treasury market than how much is held in hands that are leveraged 10-50x through repo. Within living memory we have had a very nasty experience with what repo runs can cause, and this is a GFC-revealed vulnerability that we haven’t really addressed.
Oh for sure. And to stress again, this is a very weakly held position. But in this case the issue is that the sheer amount of financial activity that is supported by extremely short term leverage.
November 8, 2025 at 7:08 PM
Oh for sure. And to stress again, this is a very weakly held position. But in this case the issue is that the sheer amount of financial activity that is supported by extremely short term leverage.
De facto variants of repo have obvs existed for a long time (eg BoE’s bill discounting) but “modern” repo was set up by the Fed system as a way to give commercial banks financing for purchases of Liberty Loans, and then used as a tool to help support Treasury market indirectly after the Accord.
November 8, 2025 at 7:05 PM
De facto variants of repo have obvs existed for a long time (eg BoE’s bill discounting) but “modern” repo was set up by the Fed system as a way to give commercial banks financing for purchases of Liberty Loans, and then used as a tool to help support Treasury market indirectly after the Accord.
🤷♂️ basically. I just think that it’s possibly suboptimal that something initially set up as a WWI financing tool and ramped up to support a post-Accord UST market is now a ca $12tn+ fickle funding market for a massive part of the financial and real economy.
November 8, 2025 at 4:32 PM
🤷♂️ basically. I just think that it’s possibly suboptimal that something initially set up as a WWI financing tool and ramped up to support a post-Accord UST market is now a ca $12tn+ fickle funding market for a massive part of the financial and real economy.
That’s an *extremely* stylised example, for simplicity’s sake. In reality you’d be paying a lot less.
November 7, 2025 at 4:02 PM
That’s an *extremely* stylised example, for simplicity’s sake. In reality you’d be paying a lot less.
Come for the chart, stay for comments BARC analysts overheard at a data centre conference:
“There aren’t enough bodies and resources to do what we’re expected to do”
“Enjoy the ride on a rocket without seat belts”
LMy queue is this big, how big is yours?’
“Budget isn’t the limiting factor”.
“There aren’t enough bodies and resources to do what we’re expected to do”
“Enjoy the ride on a rocket without seat belts”
LMy queue is this big, how big is yours?’
“Budget isn’t the limiting factor”.
November 6, 2025 at 4:23 PM
Come for the chart, stay for comments BARC analysts overheard at a data centre conference:
“There aren’t enough bodies and resources to do what we’re expected to do”
“Enjoy the ride on a rocket without seat belts”
LMy queue is this big, how big is yours?’
“Budget isn’t the limiting factor”.
“There aren’t enough bodies and resources to do what we’re expected to do”
“Enjoy the ride on a rocket without seat belts”
LMy queue is this big, how big is yours?’
“Budget isn’t the limiting factor”.
“Legal” repercussions you say? 😏
November 6, 2025 at 10:34 AM
“Legal” repercussions you say? 😏