Goldman: Limited Fed FX Swap Take-Up Another Sign Of Muted Year-End Turn

Goldman Sachs note that "the Fed's USD FX swap lines for longer-term (84-day) funding extended over the year-end turn for the first time this week. Results from this week's operations broadly showed muted demand for dollar funding, with only EUR15mn take-up by the ECB and no utilization at the BoJ and BoE. While we'll continue to watch how utilization of the swap lines evolves over the coming weeks, foreign institutions at this stage appear to feel comfortable accessing dollars through traditional channels over the year-end turn. We've noted previously that an abundance of liquidity, the presence of Fed backstop facilities, and a lesser degree of bank balance sheet reduction into year-end are all suggestive of a fairly muted year-end for dollar funding markets. We see limited FX swap line utilization as yet another indication that significant stresses are unlikely to emerge at this stage."