grip_h

[grip_h @gb10513]

@NikLentz Isn’t “TDS” a bit reductive? To me it’s always seemed like an ad hominem shorthand conceived to undercut discussion. Are there any particular Trump related market takes or trading themes you are repeatedly hearing that you especially disagree with or are tired of hearing?

[grip_h @gb10513]

@darioperkins Was that in the fortune cookie of last night’s Chinese takeaway?

[grip_h @gb10513]

@conorsen This is a pretty convoluted way of saying, “Good call @darioperkins!”

[grip_h @gb10513]

@WinMonroe @aRishisays @EtraAlex @jstatistic The overall impact on repo is likely to be very small I think - it just makes the range between iorb+2 and iorb+10 slighlty stickier to move through - assuming that happens during a period when Treasury has decent cash buffer at that time.

[grip_h @gb10513]

@WinMonroe @aRishisays @EtraAlex @jstatistic Look I’m not saying no one will touch it, just that these are all the same questions that hamper SRP

[grip_h @gb10513]

@aRishisays @WinMonroe @EtraAlex @jstatistic And even then the “support” is such a narrow thing: it’s only really a thing if repo is: above iorb, less than SRP, tsy happens to have excess at that time, and dealers are willing to pass the liquidity on to end leverage users. Not nothing, but point here is clearly fed b/s

[grip_h @gb10513]

@aRishisays @WinMonroe @EtraAlex @jstatistic For sure! But who says dealers take it? seems like it could have same pitfalls as SRP - stigma, rigidity of operations, balance sheet, desire to not piss off day pvt liquidity providers, etc. Many dealers would rather pay up than tap SRP, they would need to make this different

[grip_h @gb10513]

@WinMonroe @aRishisays @EtraAlex @jstatistic And old TTL also had a different purpose which was managing reserve fluctuations in a scarce reserve regime, vs deliberate b/s shrinkage/repo support/making a return

[grip_h @gb10513]

@WinMonroe @aRishisays @EtraAlex @jstatistic 100% agree, this whole exercise is really about shrinking the fed b/s, repo support and taxpayer value are far off secondary and tertiary considerations, but on their own, not a clear cut cost/benefit win. And “shrinking the balance sheet” is really just virtue signaling.

[grip_h @gb10513]

@aRishisays @EtraAlex @jstatistic @WinMonroe But to the original comment, I still don’t think they are “lending directly in repo” in some way that SRP doesn’t.

[grip_h @gb10513]

@aRishisays @EtraAlex @jstatistic @WinMonroe I think it would be helpful to define what problem we are solving for, if idea is to put a limited, sometimes there sometimes not speed bump in the middle of the 10bp range between IORB and SRP, fine I guess? Is that juice worth the operational squeeze? I don’t know.

[grip_h @gb10513]

@aRishisays @EtraAlex @jstatistic @WinMonroe If I’m on a repo desk, I’m def not going to tell any of my usual triparty lenders they have to take a walk today because treasury has money to lend at a few bps below market rate.

[grip_h @gb10513]

@aRishisays @EtraAlex @jstatistic @WinMonroe Not sure I’m following this point, either way is a government entity offering repo liquidity, presumably uncleared (until we hear otherwise), via an operation. Pricing difference maybe worth something but don’t see intent of the govt entity really entering into it.

[grip_h @gb10513]

@aRishisays @EtraAlex @jstatistic @WinMonroe Right, but “lend in triparty to dealers” is exactly what Fed already does. So still worth asking how will this be different in such a way that it gets people to draw on Treasury op? Maybe being a few bps lower is enough but still think you run into some of the same issues SRP has

[grip_h @gb10513]

@aRishisays @EtraAlex @jstatistic @WinMonroe Fwiw the deck did suggest this would be an operation (I assume managed by the Fed) initially open to same counterparties as SRP

[grip_h @gb10513]

@aRishisays @EtraAlex @jstatistic @WinMonroe The real differentiator would be FICC clearing but there are costs and issues with that as well - same quicksand Fed SRP gets stuck in

[grip_h @gb10513]

@Btico19 @darioperkins I’ve also always wondered about the alternate history where omicron didn’t hit in early 2022 and close down China again and Russia didn’t invade Ukraine. Inflation might have ended up looking a lot more transitory if not for those completely unexpected (and exogenous) shocks.

[grip_h @gb10513]

@Btico19 @darioperkins I feel like people ignore the tradeoffs, bailing on “transitory” isn’t some costless fix for inflation. In 2021 it could have meant nuking 1mn jobs on top of all the covid layoffs to accomplish what? Core only goes up to 4% instead of 5%?