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The BarefootHealer's avatar

Very much agree. My instincts tell me that this is not just a USA occurrence.

Have you noticed similar signals globally?

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Jeff Fair's avatar

These are technical details, but all facts matter. Since March of 2020, the required reserve rate is zero for all financial institutions. The issue is mainly cash liquidity (definitely a legitimate concern), not required reserves. Also, the Fed has been working hard for over a decade to remove the “lender of last resort” stigma from the discount window. While not significant in the grand scheme of things, the annual crop lending cycle for most ag banks peaks in August-October, so borrowing data (FHLB and FRB) on the 9/30 Call Reports tends to be higher than in other quarters. I’ve also seen banks with excess capital enter into leverage strategies of matched or mismatched duration over the last four months (funded by wholesale borrowings) to acquire bonds at expected cyclical high yields.

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