by Jeffrey P. Snider
Alhambra Partners
Repo fails in the past two weeks (the week of August 17 the most current figures) were both more than $192 billion. Though that level is highly elevated, those were actually the fewest fails since mid-June, and the fewest in consecutive weeks since early May. The 8-week average remains about $245 billion, a noticeable increase from even last year’s “dollar” charm.
At the end of May 2014, the 8-week average of repo fails were just more than $100 billion. Thus, since the start of the “rising dollar” period, repo fails have increased, on average, more than two and a half times, often punctuated, as mid-March, by rather alarming extremes. This is a clear, unambiguous signal of collateral problems; i.e., a shortage.