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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: russwinter who wrote (25605)3/15/2005 12:59:17 PM
From: mishedlo  Read Replies (1) of 116555
 
Mish: "Is the daily watching of repos and coupon passes a meaningless activity or not?"

Heinz:
in brief, watching it daily probably doesn't make a lot of sense. but one should check the activity out every once ina while. in essence, the information conveyed is the following: it tells you whether the Fed Funds 'target rate' is below or above the level a comparable rate would be in a free market. in short, if it takes a lot of injections to keep the trarget rate at its level, it's likely that the rate would be higher in a free market. otoh, if liquidity is 'drained' regularly to keep the rate at its desired level, it follows that in a free market, the rate would be lower. basically it documents the degree of market manipulation the Fed is engaging in.
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