Strains Build in Funding Markets Despite a Barrage of Liquidity
- Rates on overnight Treasury collateral spiked above 2%
- Commercial paper spreads still near widest levels since 2009
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Over the past week, the Federal Reserve has hit the U.S. dollar funding markets with a barrage of liquidity and tools to ensure they remain lubricated. Yet indicators of funding stress are still showing pressure.
In an emergency action Sunday, the central bank slashed interest rates to zero, adjusted the parameters of global dollar swap lines, in additional to offering trillions of dollars of liquidity via operations for repurchase agreements.