Fed Repo (outstanding, awarded and term)

Think of it this way

A friend lends to you when you are short and you leave something as collateral. What they gave you today is one thing; what you owe them in total is another: if on Monday they lend you 100 for a month and on Tuesday nothing, on Tuesday you still owe them 100. That is outstanding repo. And asking them until tomorrow is a pinch; asking them for three weeks is admitting the problem will not fix itself.

What is Fed Repo (outstanding, awarded and term)?

The three ways of looking at the money the Fed lends against Treasury bonds, and they are three different things that should not be confused. OUTSTANDING REPO is the open balance: how much cash the Fed has lent and not yet been repaid on each date. It is the only one of the three that measures liquidity, because every dollar on that line is in a bank's hands right now. AWARDED is how much banks requested at that day's auction: a flow, not a balance, so it goes back to zero the next day even if the money is still on loan. And TERM is the part of that awarded amount that matures in more than one day. It can range from 2 days to several months —the Fed has lent for as long as 84— and what matters is not the figure but that it appears: it means the Fed does not consider the problem temporary. That is why it is drawn as a mark on the days it happens.

How to read Fed Repo (outstanding, awarded and term)

Pay attention to the gap between outstanding and awarded, which is what reveals whether there are long operations open. On December 31, 2019, 26 billion was awarded but 256 was outstanding: ten times more. The real peak of support was 496 billion on March 17, 2020, while the largest auction day was 276. Anyone looking only at auctions misses almost half. Term is a switch more than a figure: a single operation appearing after years at zero says more than a 20% rise in daily repo. Lag: none, or +15 days at most.

What Fed Repo (outstanding, awarded and term) means for the market

Every dollar on the outstanding line is a dollar of bank reserves that was created and still exists, so its growth is the short-term equivalent of what QE does over the long term. And any of the three lighting up is the cleanest signal that reserves are genuinely scarce: when an institution turns to the Fed, it is saying it cannot find funding in the market at a reasonable price. The two recent episodes —September 2019 and March 2020— accompanied sharp falls in risk assets, and they also forced injections that often mark bottoms.

Where the money flows

It is the snapshot of how much Fed money is in the hands of banks and dealers right now. Example: if on Monday the Fed lent 50 billion for 14 days, on Wednesday those 50 billion are still at the bank that received them, even if there was no new operation that Wednesday. Every dollar on this line left the Fed and has not yet come back.

What to watch in Fed Repo (outstanding, awarded and term)

Use outstanding repo for any liquidity calculation and the other two to read the Fed's intent. Before interpreting a term repo mark, check which era you are in: until 2008 it was normal plumbing and appeared a hundred times a year, but with abundant reserves the window stays empty for entire years —from 2009 to 2018 it was at zero— and in that context a single mark is already a deviation. WHAT CONCLUSION TO DRAW: on its own, none. It is a confirming piece, not a signal. What is actionable is the coincidence of three things, which is what preceded September 2019: term repo marks appear, the Cash Scarcity SOFR - IORB chart starts to rise, and bank reserves are near the low zone. One alone is noise; all three together mean scarcity is no longer a hypothesis. And it is not a sell signal: those same episodes forced injections that often mark bottoms.

How much cash the Fed has lent to the system. If this lights up, some institutions urgently need it.