JPMorgan Chase & Co. says the money-market stress that sentshort-term borrowing rates surging last month is likely toget much worse despite the Federal Reserve's attempts to injectbillions of dollars into the financial system.

The Fed has offered overnight loans and started buying up to $60billion of U.S. Treasury bills a month in an effort to easepressure in the vast repo market, where bankstypically lend their assets in exchange for short-term financing.Secured lending rates shot up in late September, with analystspointing to scarcity of interbank reserves as well as regulationsthat limit the size of bank balance sheets and their repo-lendingcapacity as the potential culprits.

JPMorgan says it's not convinced the Fed has resolved the issuesin the funding markets, according to a note from analysts led byJoshua Younger in New York. Funding pressures resurfaced last weekeven after primary dealers—firms approved to trade directly withthe Fed—took all of the available overnight liquidity from thecentral bank and sold it as many T-bills as possible.