Repo Turmoil Points to Shortage of U.S. Dollars in System, Says Manulife’s Trinh

The transcript discusses the implications of repo rates and signals from money markets, suggesting a shortage of US dollars. It explores global interest rate policies, including negative rates in Japan and the Eurozone, and the impact of QE. The discussion highlights market optimism and underpreparedness for crises, alongside systemic and geopolitical risks. The Fed's response to inflation, considering oil prices and future interest rate cuts, is also analyzed, emphasizing disinflationary forces over a 12-18 month horizon.

What is the main concern regarding the recent movements in repo rates?

• A technical adjustment due to tax payments

• A decrease in government spending

• A potential shortage of U.S. dollars

• An increase in corporate borrowing

What trend have central banks followed since the global financial crisis?

• Focusing on geopolitical risks

• Reducing quantitative easing

• Moving towards zero or negative interest rates

• Increasing interest rates

How have central banks influenced market perceptions of risk?

• By focusing solely on geopolitical risks

• By underpricing systemic financial risks

• By overpricing systemic risks

• By ignoring inflationary pressures

What is the Federal Reserve's likely response to sustained oil price increases?

• Implement a 25 basis point rate cut

• Focus on short-term inflation

• Maintain current interest rates

• Increase interest rates

What is the Federal Reserve's approach to setting policy?

• Based on current inflation

• Based on a 12 to 18 month inflation forecast

• Driven by immediate market reactions

• Focused on geopolitical stability