Money Markets Are Facing the Most Tumultuous Quarter-End Since the Financial Crisis
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Use of Federal Reserve’s reverse-repo facility ramps up
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Oct. 14 deadline for money-fund overhaul magnifies pressures
The U.S. short-term financing markets and the $2.6 trillion money-fund industry are grappling with one of the most chaotic quarter-end stretches since the financial crisis. Repo rates are soaring and money-market funds are stashing more spare cash with the Federal Reserve.
Quarter-end is often a tumultuous period. Banks typically rein in collateral lending as they shore up balance sheets, driving up rates on repurchase agreements. When banks curb repo activity, money funds — the key cash providers in the transactions — need alternative places to invest. In the past few years, one option they’ve turned to is directing more money into the Fed’s reverse repos, the tool the central bank uses to put a floor under its target for overnight rates…
Money Markets Are Facing the Most Tumultuous Quarter-End Since the Financial Crisis
