The following is an excerpt from this week’s EIR Strategic Alert Service, dated Jan. 8, 2026.
In the week from Dec. 26, 2025 to Jan. 2, 2026, the Federal Reserve injected $142 billion of emergency liquidity into the repo market, with $74 billion on Dec. 31 alone, the biggest such operation since the COVID pandemic. Mainstream financial media rushed to play down the event, insisting that it is normal at year-end for corporations to need liquidity, and thus squeeze the market. Exemplary of all media is Reuters, which wrote on Jan. 2, “The activity at the standing repo operation is highly unlikely to signal any sort of market trouble.”
However, a quick check on the website of the Federal Reserve shows that no such “normal” liquidity crisis occurred at the end of 2024, or 2023, when the Fed’s input into the repo market was zero—niente. Furthermore, this year’s injection was preceded by another one of $85 billion in the week of Nov. 25-Dec. 2, 2025, and of over $109 billion in the week of Oct. 27-Nov. 4. A “normal” liquidity crisis seems to occur every month….
When banks do not lend to each other, it can be because liquidity is needed to cover losses or some big entity is in trouble, spreading panic in the world of originate-to-distribute securitization.
