Archives of “September 17, 2019” day

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The short-term dollar funding market is feeling the squeeze

  
  Analysis
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The repo market isn’t healthy

The combination of corporate debt issuance and quarterly tax payments resulted in a shortage of dollars today. That pushed the borrowing rate on overnight repos up by 153 basis points to 3.80%.
A similar phenomenon took place last December and caused much hand-wringing (but ultimately little FX movement).
The timing of this move is particularly interesting because it comes ahead of the Fed decision. There will be some focus on the Fed funds effective rate today and whether it rises from the 2.14% level today. The FOMC targets 2.00-2.25% currently and there’s talk that it’s trading at 2.20%.
Today’s move might have sparked some outright USD buying rather than borrowing among corporates and that could be what’s weighing on EUR/USD.
Keep an eye on how it develops tomorrow.
The repo market isn't healthy

Saudi Arabia has already brought 40% of production back on line and rest could be back by month-end

  
Analysis, Crude
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Report from Energy Intelligence

oil 3 day chart
This is less-bullish for oil:
“Industry sources told Energy Intelligence that 40% of the lost production had already been restored by Monday, while one source said national oil company Saudi Aramco expects most of the rest — more than 3 million b/d — to be brought back on line by the end of September.”
More:

“Industry sources said that by Monday a combined 2.3 million b/d of oil production had been brought back on line — 2 million b/d at Abqaiq and 300,000 b/d at Khurais.

Industry sources said Aramco would seek to keep up oil deliveries to its customers by drawing down oil it holds in storage, while also offering crude grade swaps and maximizing output from its offshore fields.”

WTI is up $7.70 to $62.56 — about 80-cents from the highs. Read the full report here.

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