The Federal Reserve has injected billions of dollars into the US financial system to alleviate a dramatic squeeze in the country’s short-term funding market.
The cost of borrowing cash in exchange for US Treasuries overnight using repurchase agreements, known as repos, surged between Monday afternoon and Tuesday morning to as high as 10 per cent, an increase of more than fourfold, Refinitiv data show.
Repos are an important way for borrowers to raise short-term funding by agreeing to buy and sell securities over very short time frames. As such they are a vital lubricant of the financial system.
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