October 28, 2019 – The Fed once again escalated its intervention in the repo markets last week. The amount of liquidity available to primary dealers is now in excess of $100 billion per day.

Gold and silver responded late in the week by moving higher.

Fear that the Fed is combatting an emergency in the short-term lending markets is finally starting to weigh on investors’ minds. Fed officials have been tight lipped about what is happening, and the financial press isn’t asking too many questions.

Anyone paying attention recognizes the real reason for the repo market intervention is not what we were told...

It is anything but a short-term, limited effort to address a routine quarter-end shortage of dollars. That framing was either a lie or a gross misunderstanding of the problem – most likely the former.

The week ahead promises to be eventful. The FOMC is widely expected to reduce the funds rate by another quarter percent at its meeting on Wednesday. The key monthly report on personal incomes and spending is scheduled for Thursday. Investors will get a look at the October employment report on Friday.



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