faultlinesweekly

Posts

Showing posts with the label Dollar Funding Networks

SOFR's 99th Percentile Reached the Target Range Ceiling on Two Days, Both Month-Ends

On two sessions between July 1 and September 2, 2026, the most expensive slice of the secured overnight funding market traded at or above the ceiling of the Federal Reserve's policy corridor. On July 31 the 99th volume-weighted percentile of the Secured Overnight Financing Rate printed at 3.75 percent. On August 31 it printed at 3.77 percent. Those were the only two sessions in a 45-business-day window where that figure reached 3.75, and both of them fell on a month-end. The headline rate did nothing comparable. SOFR itself moved between 3.53 and 3.68 across the same window and stayed inside the target range on all 45 days. A reader watching only the published median would record two quiet months. The distribution underneath that median was not quiet, and the dates on which it stopped being quiet were calendar dates rather than economic events. The question this piece takes up is narrow. When the middle of a distribution sits still and its upper tail does not, which of the two ...

A Foreign Reserves Total Is One Number. Its Disclosure Template Has Four Sections.

A central bank publishes a reserves figure once a month. Wire copy carries it as a single number with a month-on-month change attached, analysts turn it into months of import cover, and sovereign credit commentary cites it as a buffer. Very little of that engages with a basic fact: the number is one line of a four-section statistical return, and the other three sections exist because that one line was once shown to be misleading. The return is the IMF's Data Template on International Reserves and Foreign Currency Liquidity, usually shortened to IRFCL. It was folded into the Special Data Dissemination Standard in March 2000, four years after the SDDS itself was established, and the reason is not obscure. In its own retrospective on the 1997–98 programmes in Indonesia, Korea and Thailand, the IMF wrote that gross reserves were a poor indicator of available international liquidity given the magnitude of liabilities set against these reserves, many appearing off-balance sheet , and ...

When Foreign Official Treasury Holdings Fall, Three Separate Data Series Have to Agree First

A headline reporting that foreign central banks are "dumping" U.S. Treasuries almost always rests on one monthly number pulled from one table. The number is usually real. What it measures, how late it arrives, whether it describes reserve managers at all, and whether anything was actually sold are four separate questions — and they are answered by three different published series that frequently disagree with each other. As of mid-August 2026, all three point in the same direction for the first time in a while. Official holdings are down on the Treasury's own survey, down on the Federal Reserve's weekly custody line, and down over a multi-year window. That convergence is worth taking seriously. It is also the exact circumstance in which the reasons matter far more than the direction, because at least four unrelated mechanisms produce an identical-looking decline. Foreign-Held U.S. Treasuries TIC survey, June 2026 · total $9,299.0 billion Offic...

The Signal That Ended Quantitative Tightening Came From Repo Markets, Not the Portfolio

Balance sheet reduction is usually explained with a mirror. Easing added securities and created reserves; tightening removes securities and extinguishes reserves; the second is the first run backwards. As an accounting identity the framing holds: assets fall, liabilities fall, and duration absorbed by the central bank returns to private portfolios. What the mirror does not survive is contact with how the most recent programme ended. The Federal Open Market Committee announced on 29 October 2025 that it would conclude the reduction of its aggregate securities holdings, effective 1 December 2025. Since June 2022 the portfolio had shrunk by more than $2.2 trillion, roughly $1.6 trillion of Treasuries and about $600 billion of agency mortgage-backed securities. Reserve balances stood at $2.85 trillion on 31 December 2025, per the New York Fed's report on open market operations during 2025. That last figure is where the mirror breaks. The previous runoff stopped in September 2019 wi...