Funding strains in the banking system worsened slightly Friday despite the New York Federal Reserve’s offer to inject $1.5 trillion of extra short-term funding.
The strains suggest the Fed’s promised injection of central-bank money, announced Thursday, hasn’t fully solved the banking system’s issues. Some analysts and investors think a return to a full quantitative easing—or bond-buying—program will be needed to calm funding markets that lie at the center of the world’s financial infrastructure.
Bond and equity markets remained volatile and price moves may not reflect normal changes in investors’ appetite for risk, according to analysts.
In a sign of growing funding strains in the banking system, indicators of the difference between the rate at which banks lend to each other and the Fed’s interest rate increased to the highest level since the tail end of the 2008-09 financial crisis.
The Fed offered up to $1.5 trillion for periods of one month and three months Thursday and Friday. However, banks only drew a total of $119.5 billion, suggesting this wasn’t the kind of liquidity they needed. The low takeup suggests that the problems might not be so simple as a shortage of central-bank reserves.
“There is lots of money in the system but it is not circulating easily,” said a foreign-exchange strategist at UBS. “The ability of the financial system to intermediate in this market is now very constrained.”
The underlying problem, say some investors, is that banks are holding too many Treasurys and don’t want any more. It is a situation that hasn’t been fully resolved since it was exposed by a spike in borrowing costs in repurchase—or repo—overnight
borrowing markets in September.

@Crash Is CM's dividend safe? 7+% is an impressive yield.

As for bargains: at the risk of sounding like a broken record: Canadian BANKS. RY CM BMO TD BNS NTIOF. Down YTD between -27% and -42%. CM's div. yield is 7.08% tonight. (Morningstar.)

Wednesday was an unsettling day on global financial markets, and not just because the stock market fell sharply enough to bring a decade-plus bull market to an end.
Underneath the headline numbers were a series of movements that don’t really make sense when lined up against one another. They amount to signs — not definitive, but worrying — that something is breaking down in the workings of the financial system, even if it’s not totally clear what that is just yet.
Bond prices and stock prices were moving together, not in opposite directions as they usually do. On a day when major economic disruptions resulting from the coronavirus pandemic appeared to become likelier — which might be expected to make typical market safe havens more popular — many of them fell instead. That included bonds of all sorts and gold.
And there were reports from trading desks that many assets that are normally liquid — easy to buy and sell — were freezing up, with securities not trading widely. This was true of the bonds issued by municipalities and major corporations but, more curiously, also of Treasury bonds, normally the bedrock of the global financial system.
People, it is fair to say, are worried about bond market liquidity.

Quote from David, "continue ignoring financial pornography, screaming heads, click-bait and other appeals to my worst instincts. Between rising market volatility, rising political frenzy and international challenges occasioned by dictators and viruses, that’s going to take some discipline.

The moves are extreme but reflect the now-dual uncertainty of something that we have not seen since the Great Financial Crisis of 2008. Don’t expect this volatility to end anytime soon. COVID-19 cases are far from peaking in the U.S. The Fed is getting more limited in its market assistance options, and Washington D.C. is failing to inspire confidence. A “V” shaped bounce to all-time news highs will not be happening for the equity and risk asset markets this time around.
But this also does not look like a 2008 GFC panic which led to a collapse in real estate valuations and an 80-90% decline in bank stock prices. (Investor Letter, 3/9/2020)