US Funding Costs Surge in Anticipation of Year-End Pressures
- Overnight repo rates for the Dec. 31 to Jan. 2 period soared
- Dealers already struggling with balance-sheet congestion
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Traders are rushing to the US funding markets, lifting financing costs to concerning levels with a little more than a month left in 2024.
The rate on overnight general collateral repurchase agreements for year-end — or loans collateralized by Treasuries — and those backed by mortgage-backed securities are soaring. The spike has some on Wall Street preparing for even more volatility as year-end regulatory burdens drives some of the largest participants to the sidelines of the repo market.