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2025-12-17 21:42:16
[New York Fed's Overnight Repo Operation Draws No Demand, Year-End Liquidity Remains Tight] ⑴ The New York Federal Reserve Bank's overnight repo operation on Wednesday (December 17) received no bids, with zero acceptances across all three types of collateral (Treasury bonds, agency debt, and mortgage-backed securities). ⑵ The operation provided full funding at a rate of 3.75%, the upper limit of the current interest rate corridor, yet still failed to attract participation from financial institutions. ⑶ This typically indicates relatively ample reserves within the banking system, or that institutions prefer to obtain short-term funding through market channels rather than central bank tools. ⑷ Combined with the firm overnight repo rate for general collateral on the same day, while overall market liquidity is not scarce, structural tightness persists at the year-end. ⑸ This result reinforces the market's assessment that year-end liquidity will remain tight, with short-term interest rates expected to fluctuate around the upper limit of the interest rate corridor.
