Funding mkts set to remain front & centre........>

US: Funding mkts set to remain front & centre given the NY Fed's reintro of term

repo's & confirmation that o'night repo ops will run 'til Oct 10.

- Late Fri BBG released a piece covering comments from ex-NY Fed trading desk

head Potter, who warned "that the type of actions taken so far may not be enough

to keep conditions calm," reportedly via a BAML conf call (rumours had already

done the rounds on this). Potter reportedly stated that the Fed "may have to

expand the BS via outright purchases of Tsys, to ensure stable liquidity

conditions at quarter-/year-end." Comments were pre-Friday's repo announcements.

- Elsewhere, NY Fed Pres Williams told the FT that "the thing we need to be

focused on today is not so much the level of reserves. It's how does the mkt

function." Snr VP of the NY Fed mkts group Logan pointed to the concentration of

excess cash at a small no. of banks as 1 potential issue in the same interview.

- Bill/Tsy sales as well as scope for funding mkts looking at year-end "turn"

will keep the situation fluid. Worth flagging that the Tsy's cash a/c saw

~$100bn added last week (W/W), with another ~$100bn set to be added by year-end

(i.e. drained from the system), based on the Tsy's current assumption.