What Is The Repo Market?

People know to talk about repo, but don’t actually know what it is about. What is repo? Why does it matter?

What You Need To Know About The Repo Market 1

The Repo market is the largest market that people do not know exists

What is money? This is not as simple a question as it may seem at first glance.

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What You Need To Know About The Repo Market 2

The Repo market is the largest market that people do not know exists

While all Treasuries can be used as collateral, they are not all made equal.

At least from the perspective of what serves as the best, and most widely accepted forms of collateral.

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What You Need To Know About The Repo Market 3

The Repo market is the largest market that people do not know exists

If you have heard the term “shadow banking system” being bandied about in the past few years, the repo market is a big part of it.

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What You Need To Know About The Repo Market 4

The Repo market is the largest market that people do not know exists

Collateral in the repo market isn’t limited to sovereign bonds.

A wide variety of fixed income instruments can, and are used as collateral, for example, asset backed securities (ABS), mortgage back securities (MBS), and corporate debt.

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When Will You Pay To Lend Money For US Treasuries?

The Repo market is the largest market that people do not know exists

The financial media has begun reporting on liquidity problems in the Treasury market, which means that the problem is reaching a phase where it is acute.

Is this due to recent narratives focused on inflation?

Or is there something more going on, like say in that global market that no one seems to know much about – repo?

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