I am now pretty certain I have no idea how this is going to play out, or how these repo's work. But the *taper* started to taper in Jan 2014 - it has taken 12 months to completely taper off, with the result being -
- versus the QE on/off switch for QE1 and QE2. The impact on primary dealers is to now purchase all UST debt issuance as per no QE markets (without the Fed). But the repo market is competition also.
"This means that the year-end demand is likely to far exceed the $300bn currently made available. In December the Fed will therefore begin offering term reverse repo maturing around January-2. Doubling the availability over the turn will feed the repo markets, temporarily releasing $600bn of treasuries from the Fed's balance sheet."
The rally in US Treasury prices in 10yr and 30yr are yet to weaken, but Dec/Jan will be interesting. It is possible that a high in UST prices (low yields) occurs in Dec2015 based on previous long term data. Meaning of the 10/30yr rallies have not faded into Christmas, the lower yields will play out.
- versus the QE on/off switch for QE1 and QE2. The impact on primary dealers is to now purchase all UST debt issuance as per no QE markets (without the Fed). But the repo market is competition also.
