Core Insights - Federal Reserve liquidity facilities experienced significantly lower interest from Wall Street than anticipated as the third quarter concluded quietly [1][2] Group 1: Market Activity - Money market funds and eligible firms deposited $49.1 billion at the Fed's overnight reverse repo facility, while the Standing Repo Facility (SRF) lent $6 billion, both figures falling short of pre-event estimates [2][6] - The quarter-end typically presents challenging money market conditions, with firms reducing market participation and liquidity management becoming difficult amid volatile interest rates [3] Group 2: Quantitative Tightening (QT) - QT aims to reduce liquidity in the financial system, reversing the excess cash injected during the COVID-19 pandemic, leading to declining overall liquidity levels [4] - The last instance of QT resulted in an unexpected liquidity shortfall in September 2019, causing a spike in money market rates and halting the drawdown process [5] Group 3: SRF Usage Concerns - The SRF, designed to act as a buffer for temporary liquidity shortfalls, has faced skepticism regarding its effectiveness, with concerns that firms may avoid using it to prevent signaling financial distress [7] - Economic factors, particularly higher borrowing rates on Monday compared to Tuesday, likely influenced the lower usage of the SRF [8] Group 4: Repo Rates - The general collateral or repo rate opened at 4.45%, peaked at 4.60%, and closed at 4.35%, indicating fluctuations in borrowing costs [9] - Prior to the Fed's SRF bids, the repo rate reached 4.43%, approximately 18 basis points higher than the rate offered at the SRF [9]

On the back of a 45% surge in the price of gold this year, the US Treasury's hoard of the barbarous relic has surpassed $1 trillion in value for the first time in history. That is more than 90 times what's stated on the government's balance sheet and is reigniting speculation that Treasury Secretary Bessent could revalue (mark to market) the massive pile of precious metal. Unlike most countries, the US’s gold is held by the government directly, rather than the central bank. The Fed instead holds gold ...

(Reuters) -A largely untested Federal Reserve liquidity facility drew no demand at its first daily auction on Tuesday despite expectations on Wall Street for a scramble by banks to secure funding to cover the often-turbulent quarter-end period. New York Fed data showed no funds were drawn from its Standing Repo Facility, or SRF, which the Fed created in 2021 and allows eligible firms to quickly convert bonds into cash. A second daily operation is set to close at 1:45 p.m. ET, which could still see a deman ...

Core Viewpoint - The Reserve Bank of Australia (RBA) has maintained its benchmark policy rate at 3.6% amid rising inflation, which is currently at its highest level in over a year [1][2]. Economic Indicators - Australia's headline inflation rate for August was reported at 3%, the highest since July 2024, driven by increases in housing, food, and alcohol prices [2]. - The RBA noted that inflation in the September quarter may exceed previous expectations, indicating potential persistence in certain areas [2]. Monetary Policy Actions - The RBA has reduced rates by 75 basis points in 2025, following a period of stability at 4.35% since November 2023, as part of efforts to control inflation [3]. - The central bank's decision to hold rates reflects a focus on curbing inflation while acknowledging the uncertain economic outlook [3][4]. Economic Growth - Australia's GDP grew by 1.8% year-over-year, surpassing the 1.6% forecast by economists and improving from the previous quarter's 1.3% growth [5]. - On a quarter-over-quarter basis, GDP increased by 0.6%, exceeding the 0.5% expected growth [5]. - The growth was primarily driven by domestic spending, including household and government consumption [5].

Group 1 - Asia-Pacific markets exhibited mixed trading patterns, with a focus on the Reserve Bank of Australia's (RBA) interest rate decision [1][2] - The RBA is anticipated to maintain its cash rate at 3.6%, as high inflation limits the potential for monetary policy easing [1][2] - Building approvals in Australia are expected to show a 2.8% increase in August, following a significant 8.2% decline in July [2] Group 2 - Australia's S&P/ASX 200 index experienced a slight increase of 0.1% [3] - Japan's Nikkei 225 index decreased by 0.17%, while the Topix index fell by 0.21% [3] - South Korea's Kospi index rose by 0.27%, and the Kosdaq index advanced by 0.18% [3] - Hong Kong's Hang Seng index futures were trading at 26,735, surpassing the last close of 26,622.88 [3]

Core Points - The Labor Department is preparing for a potential halt in economic data releases due to a possible partial government shutdown, which could significantly impact economic insights ahead of the Federal Reserve's October meeting [1][10] - The Bureau of Labor Statistics (BLS) plans to suspend all operations, which includes halting the release of critical economic reports [2][4] - The upcoming release of the monthly nonfarm payrolls report and the Consumer Price Index (CPI) is particularly crucial, as they will provide key information on job growth and inflation before the Federal Reserve's policy meeting [5][7] Group 1 - The Labor Department's contingency plan indicates that economic data scheduled for release during a government shutdown will not be published, affecting various reports related to import/export prices and wages [4][10] - The BLS typically publishes around a dozen reports each month, and the shutdown would disrupt all active data collection activities for BLS surveys, potentially delaying future releases [4][10] - The government shutdown is set to occur if Congress does not approve a funding extension, with a deadline of 12:01 a.m. ET on Wednesday [8] Group 2 - The BLS's website will be inactive during the shutdown, meaning no updates or technical fixes will be available, further complicating access to economic data [11] - The revision of 911,000 jobs, the largest on record, has drawn criticism from the White House, which is calling for a Federal Reserve rate cut in response to the economic situation [2]

Group 1 - The Riksbank's deposit requirement will take effect on 31 October 2025, requiring institutions to hold funds in special accounts without earning interest [1] - Deposits to these accounts can start as early as 15 October 2025, leading to uncertainty regarding the liquidity surplus during the period from 15 to 31 October [1] - The Riksbank plans to reduce the offered volume of Riksbank Certificates by SEK 40.1 billion from the issue dated 14 October 2025 due to the expected reduction in liquidity surplus [1]

Monetary Policy and Economic Outlook - Bank of Japan (BOJ) board member Asahi Noguchi indicates a heightened need to adjust the policy rate as Japan moves closer to its 2% inflation target, signaling a new phase for monetary policy [2][9] - Inflation expectations are slowly converging on 2%, driven by shifts in corporate price and wage-setting behavior and growing corporate profits facilitating cost pass-through to prices [3][9] - Despite ongoing inflation, there is a slowing rise in import prices, which could lead to slower consumer inflation [4] Labor Market and External Risks - The labor market is near full employment and the output gap is close to zero, but there are concerns over potential downside risks stemming from U.S. tariff policy [3][9] - Noguchi emphasizes the need for a flexible policy approach to address evolving risks, particularly those that could delay real wage growth [3] Corporate Developments - Deutsche Lufthansa (DLAKF) has set ambitious financial targets for 2028–2030, aiming for a significant profitability boost and a global workforce reduction of approximately 4,000 jobs [5][9] - The airline plans to modernize its fleet with over 230 new aircraft as part of its strategy [5]

Group 1 - The central bank conducted a reverse repurchase operation of 181.7 billion yuan for 7 days, with the bidding amount and winning amount both at 181.7 billion yuan [1] - The operation interest rate remains unchanged at 1.40%, consistent with previous rates [1]

Group 1 - The core viewpoint is that Dallas Fed President Lorie Logan's suggestion to replace the effective federal funds rate with other indicators as a key policy rate may signal a shift in central bank targets [1] - Previous discussions among Federal Reserve officials about changing policy targets did not yield results, but the presence of two influential figures focused on market pipeline issues in the FOMC increases the likelihood of a policy target change [1] - The challenges associated with changing policy targets are primarily communication-related, as the federal funds rate is influenced by the Fed's managed rates [1] Group 2 - The strategy suggests that the tri-party general collateral repo rate is the best target based on repos, as it is most directly influenced by the Fed's managed rates [1] - Targeting the secured overnight financing rate is more complex due to its dependence on multiple factors [1] - If the Fed targets the repo rate, it may take quicker action when the benchmark approaches the edge of the target range, indicating a potential shift in policy response [1]