Year-End Money-Markets Angst on Fed Exit Echoes 2018 Crunch
- Volatility in repo market rising for first time in five years
- Usage of the reverse repo facility jumped to $819 billion
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The Federal Reserve’s continued push to remove liquidity from the financial system is bringing back volatility to year-end trading in the overnight funding markets for the first time in five years.
Volatility in the market for overnight repurchase agreements is generally tame, but it has started to move, with repos trading as high as 5.53% before closing at 5.32% on Tuesday, according to Curvature Securities. The last time the repo market moved at all around year-end was in 2018, when it spiked more than 3 percentage points to 6%.