- The USD overnight repo.....>

US TSYS/OVERNIGHT REPO: - The USD overnight repo rate surged to nosebleed levels

on New Year's Eve. According to ICAP pricing the overnight rate hit 6.125% from

2.565%, effectively covering the same amount of ground in one session as the

November 2004-August 2006 period. So far, at least, the episode has received

very little airtime and the discussion that has taken place seems to be of the

'brush it under the carpet' variety with period-end window dressing of bank

balance sheets being cited as the likely culprit. While this has certainly been

one of the main contributing factors, we are more concerned with the sheer scale

of the repo surge which points to severe fragility at the heart of the repo

market.

- For a printable PDF please see:

http://marketnews-m.objects.xtenit.com/MNI_-_Repo_Flash_Crash.pdf