Repo Squeeze Has Upset Funding Markets. It’s About to Get Worse
- Another round of Treasury settlement coming at month end
- Concern around quarter-end dollar funding still showing up
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The dollar-funding squeeze, which rocked short-term interest rate markets this week, may deepen further with the end of the quarter approaching.
Banks are just about to start their usual pattern of cutting back on providing liquidity to close books and meet regulatory requirements. And next week, there’s another round of Treasury auctions that could leave markets net short of another $45 billion in cash.