Search
 
Analysis

What Does the U.S. Repo Market Squeeze Mean?

It could signal liquidity risk to the broader economy.

Throughout 2019, banks’ end-of-quarter tidying of their balance sheets has resulted in spikes in the U.S. overnight repurchase agreement (repo) rates. This volatility has set the market on edge. The Federal Reserve stepped in, with traders injecting cash into U.S. money markets. As a result, the last day of the third quarter (Monday) was relatively uneventful in the repo market.

Still, this year’s market volatility signals a broader risk. As a recent report from Fitch Ratings puts it: “While the Fed was ultimately able to stabilize repo dollar funding rates through ad-hoc funding infusions, further repo-market volatility could exacerbate global liquidity issues, potentially extending to other asset classes and players beyond the U.S. repo market.”

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

Treasury and Risk

Treasury and Risk

Treasury and Risk Staff Writers

More from this author

Dig Deeper

 

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2023 ALM Global, LLC. All Rights Reserved.