From Business Insider:
“This morning, this message popped up on Bloomberg:
“MARKET NEWS SAYS ‘RUMORS’ ARE JAPAN MAY TELL OF PLANNED SALE”
Said sale in question is rumored to be a U.S. Treasury sell off by the Japanese government.
Adding fuel to the fire is the U.S. and the Federal Reserve. Today, the Fed conducted a reverse repo (repurchase) test that could help with the Japanese UST sale.
On the other hand, this wouldn’t seem to jibe with reports that the country’s main concern is the rising yen. If anything, you’d think they’d be snapping up more treasuries. So something is amiss.
The Houston Chronicle reports Japan could be selling off as much as $100 billion worth of treasuries.”
My Comment:
Well, nothing does jive these days. And the reason nothing does is because half of what´s done in public is done for motives and with a trajectory invisible to the public eye.
And yet the press reports these events without any context or history as perfectly transparent events….
I´ll be back with whatever I can dig up. I don´t understand reverse repos…
Investopedia Says:
What Does Repurchase Agreement – Repo Mean?
A form of short-term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day.
For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction, (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement.
Investopedia explains Repurchase Agreement – Repo
Repos are classified as a money-market instrument. They are usually used to raise short-term capital.
It would appear the Fed is doing a reverse repo with dealers (like Goldman) to keep a lid on the supply of Treasuries and therefore interest rates.