The Fed was finally successful in cutting the fed funds/libor spread with a glorified 28 day repo, after failing to narrow the spread with 100 bp of rate cuts.

Narrowing the ff/libor spread ‘automatically’ lowers various libor based funding rates, probably including jumbo mtg rates, which have been a concern of the Fed as well.

Makes me wonder if they would have cut the ff rate if they had used this ‘facility’ and narrowed the ff/libor spread right away back in August?

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