Volatile Quarter-End Signals Funding-Market Dysfunction to Come

Rates in the US funding market surged at the end of the quarter in a sign of potentially further dislocations in money markets as Congress lifts the debt ceiling.

Volatility intensified on Monday beyond the typical spikes seen at the end of months and quarters. That’s fueled concern among some market participants about dysfunctions in the plumbing of the US financial system and the ability of the market to absorb the deluge of bills once the debt ceiling is resolved.