To: pater tenebrarum who wrote (82193 ) 1/4/2000 11:05:00 AM From: Ken98 Respond to of 86076
<<US Govt Repo: Collateral a bit tighter, 30-years at 4% By Bridge News New York--Jan 4--Collateral was in general a bit more expensive to borrow in overnight repo Tuesday, as the general collateral rate felt a bit of pressure from the soft fed funds rate and a number of issues continued to suffer after-effects from last week's tight year-end market, traders said. * * * The tightness in the repo market is largely driven by the market's continuing adjustment to both the liquidity the Federal Reserve pumped into the market late last week, along with the substantial amount of repos that are rolling off both today and throughout the week. The general collateral overnight rate was last at around 5.46% under the soft fed funds rate of 5.4375%, after trading at 5.60% on Monday. Traders said it traded in a fairly tight range throughout the morning. "You still have some dislocation (in the overnight rate) because the Fed's got all those repos rolling off" and the market is going to have to absorb all that collateral, a trader said. Forecasters at R.H. Wrightson said about $80 billion in Fed repos expire this week. But at the same time, a large amount of cash management bills start coming due starting Jan 13, and some of that money will hit the repo market and complicate the sector's work, the trader said. Heading forward, "we should be relatively tight, around 5.50%, for the next couple of days" for the general collateral rate, the trader said. Current long bonds were the tightest issue this morning, and were to some extent driven by the volatility seen in the cash market, traders said. The issue was last at 4.00% after trading as tight as 2.50% earlier in the session. Current 5-years and 10-years were also expensive to borrow at 4.50% and 4.75%, respectively. Old 10-years were 10-basis points tighter than Monday at 4.40%. A dealer in New York said the issues that are special are tight mostly on after-effects from last week's market. "I think maybe some of the collateral hasn't sorted out yet" and that's why it is expensive to borrow, he said.>>