@AriDavidPaul Hi—only transactions that ACTUALLY happen impact avg fed funds rate. Tx that don’t happen can’t impact it. 2 wks ago, banks prob lent to Deutsche, for ex., albeit at slightly elevated rates. Now, nobody would lend at any rate so those tx, which pvsly lifted the avg, no longer do.
@AriDavidPaul So, when the effective fed funds rate drops it’s not always sign of health. It can be warning sign that some banks are completely shut out of interbank lending mkt. For those banks (the big ones), really the only solutions are equity capital injection or bailout/in 🤬of some form
@AriDavidPaul Ari -- here's more analysis. Lots of fixed income analysts are trying to figure out what's going on here, but it appears one or more big banks may be having funding trouble (this analysis, from a different angle, reaches same conclusion).
