The Federal Reserve injected today $105 billion in temporary cash into the U.S. banking system in an effort to meet the funding needs of banks and Wall Street following turbulences in money markets last week, according to Reuters.
The New York Federal Reserve awarded $30.0 billion to primary dealers at a 14-day term repurchase agreement (repo) operation and $75 billion in an overnight repo operation.
Demand for funding from the Fed was strong with $62 billion in bids submitted for the 14-day operation and $80.2 billion at the overnight operation, data from the N.Y. Fed showed.
On the open market, overnight repo rates slipped to 1.95%-2.03% after the addition of cash from the central bank, down from 2.01%-2.10% shortly before the Fed operations.
Primary dealers were able to obtain overnight funding at below-market cost.
The stop-out rate on overnight repos backed by Treasuries at Tuesday’s Fed operation was 1.80%, while those on one-day repos backed by agency debt and mortgage-backed securities was 1.83%.
The N.Y. Fed will conduct an overnight repo operation, worth at least $75 billion, on Wednesday.