Definition
The market for very short-term loans, usually overnight, where one side sells securities, often Treasuries, and agrees to buy them back later, often the next day, at a slightly higher price. Repo is short for repurchase agreement.
The story
It's how banks, funds and dealers borrow cash against high-quality collateral, trillions of dollars a day. In September 2019, SOFR (the Secured Overnight Financing Rate) jumped above 5%, and the New York Fed began offering cash through daily repo operations. In 2021 it set up a permanent Standing Repo Facility to backstop the market.
Why markets watch it
Stress in the repo market can spread quickly, so the Fed watches it closely.
Connects to
SOFRReverse repoBank reservesTreasury bills, notes and bonds
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms