Goldman Sees Another Overnight Lending Rate Spike on Record Treasury Deluge
- Bank says $531 billion of Treasury auctions settle Thursday
- Month-end jumps in overnight lending rate are becoming common
The US Treasury building in Washington, DC.
Photographer: Kent Nishimura/BloombergThis article is for subscribers only.
Goldman Sachs Group Inc. said US money markets this week are heading toward what’s becoming an increasingly common month-end ritual: a sharp — if brief — jump in overnight lending rates as Wall Street banks absorb a huge pile of new Treasuries.
A record slate of auction settlements coming Thursday will pull large amounts of cash away from banks just as they bolster capital holdings to satisfy regulatory requirements, threatening to reduce the amount that’s free to be lent out through overnight repurchase agreements.