Eurodollar University The Fed Just Revealed a Massive REPO Problem (No One’s Ready for This)
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Dec 11, 2025 Dive into the complexities of the Federal Reserve's recent decisions! Discover how FOMC divisions reflect in cautious inflation policies. Explore the troubling insights from the Beige Book pointing to labor market weaknesses. Unpack the stress in the repo market, revealing why the Fed is shifting tactics. Learn about the implications of a recent rate cut and the debate over inflation versus labor factors. Finally, get Jeff's take on how these signs could impact future monetary strategies.
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Fed Forced To Replenish Reserves
- The Fed signaled it may restart purchases of short-term Treasury bills to raise reserve balances.
- This 'not QE' shows repo market stress has become material enough to force policy action.
Early Year-End Repo Tightness
- Year-end repo funding stress appeared unusually early and already pushed term repo rates far above IOR.
- Market participants began booking year-end funding sooner to avoid a rush and limited supply.
Monitor Eurodollar Signals Closely
- Watch Eurodollar and credit-cycle signals, not just headlines, to gauge systemic stress.
- Consider attending focused briefings to learn how monetary signals translate into investment opportunities.