Reports say investors put US$0.68 billion into high yield bond funds in the week ending August 13. That's a welcome relief after the US$7.1 billion outflow of the prior week.
Meanwhile, though, other worrying trends in the financial markets have Fed officials and bankers on edge. Liquidity is not as abundant in the "repo" market as it was. "Repos" are repurchase agreements in which borrowers sell government bonds (principally) for cash to a third party at the same time they promise to repurchase the bonds at a slightly higher rate in the future.
That some banks are reported to be reducing their role as middlemen in the repo market is important because financial institutions like banks and hedge funds use repos for funding. Repo markets froze up in the 2008 crisis, threatening the international financial system.
No one is suggesting that repo markets are on the verge of a 2008-style seizure. However, two Fed regional presidents expressed their concern about repo markets this week.
Meanwhile, though, other worrying trends in the financial markets have Fed officials and bankers on edge. Liquidity is not as abundant in the "repo" market as it was. "Repos" are repurchase agreements in which borrowers sell government bonds (principally) for cash to a third party at the same time they promise to repurchase the bonds at a slightly higher rate in the future.
That some banks are reported to be reducing their role as middlemen in the repo market is important because financial institutions like banks and hedge funds use repos for funding. Repo markets froze up in the 2008 crisis, threatening the international financial system.
No one is suggesting that repo markets are on the verge of a 2008-style seizure. However, two Fed regional presidents expressed their concern about repo markets this week.
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