JPMorgan Sees Repo-Rate Spikes as Short-Lived, No Breakdown
- Younger expects spreads will normalize during next few days
- Fed operations should remain effective in controlling pricing
This article is for subscribers only.
There’s little evidence of a breakdown in repo markets, and signs of stress in some indicators should be short-term issues, according to JPMorgan Chase & Co.
Repo rates across the triparty and bilateral parts of the market jumped to the widest levels since November after the Federal Reserve cut rates by 50 basis points earlier this week. But this was a sign of short-term money-market fund reallocations rather than the beginning of “something more sinister,” strategist Joshua Younger in New York wrote in a note Thursday.