Funding and Collateral Solutions
Centrally Cleared Repo Market Brief
A quarterly update on the developments in the centrally cleared sponsored repo market
Through innovative and flexible cash investment and financing solutions, we provide both our custody and third-party clients access to the Fixed Income Clearing Corporation (FICC) sponsored repo platform.
Given the interconnectivity between repo markets, monetary policy and macroeconomic trends, we want to help you stay up to date on what’s happening in the market with a specific focus on the rapidly growing sponsored segment. With views on recent market trends and what to expect in the future, our quarterly briefs give you the insight you need to unlock the benefits of centrally cleared repo.
Highlights from this quarter:
• Rising inflation has forced the Fed to expeditiously raise interest rates in Q2 with a surprise 75bp hike at the June FOMC meeting – repo rates followed suit as rates moved up to 1.55 to close out the quarter.
• The Fed’s RRP continues to be in the spotlight, with as much as $2.3 trillion at the facility in Q2 as investors are hesitant to move out the curve due to uncertainty with the Fed.
• The Fed path forward is the biggest question mark facing money markets, and we’ve seen a shift in money fund composition as they wait this out.
• Repo still remains attractive versus T-Bills and other short-term investments, as T-Bill paydowns persisted in Q2 and continued to skew the supply demand balance in the market.