Recent stress in repo markets reflect the confluence of a shrunken Fed balance sheet amid steady economic growth and increasing capital and liquidity regulations on banks.
Longer-term investors should focus on an energy company’s structural advantages in terms of asset base quality, operational efficiency and financial discipline, not the price of oil and gas.
A rising Treasury yield amid better economic data, easing macro risk and a few more monetary injections may be spurring the rotation. Corroborating, so far, a “mid-cycle adjustment”?
