Repo Auction: Repo and Market Participants

repo auction: The New York Federal Reserve said late Tuesday that it would carry out a second overnight repo operation on Wednesday 75 billion in repos after Tuesday's 53 billion funding, according to Market Watch. The important short-term repo rate marks the amount bond dealers, hedge funds, and other market participants are charged for borrowing funds for a short period, in return for highly liquid collateral such as Treasurys. The Fed carried out its first overnight repo auction in a decade to bring the benchmark federal-funds rate, which jumped to a high around 9%, back into a desired 2%-2.25% range. It is unusual for significant spikes to occur in normal markets that aren't facing a financial crisis and the recent jump in short-term rates and the Fed's response to the spike in borrowing costs has caused traders and bankers to question whether the regulator had a handle on that crucial area of financial markets. This is what the New York Fed is supposed to do making sure markets are running smoothly. They were a day late, they should've been in the market once things got a bit crazy in the afternoon on Monday said Marvin Loh, senior global markets strategist at State Street. (news.financializer.com). As reported in the news.