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Repo rate hits 7.25% on year-end volatility
US Treasury issuance on December 31 said to have fuelled last-minute dash for cash
![US Treasury US Treasury](/sites/default/files/styles/landscape_750_463/public/2017-04/us-treasury.jpg.webp?h=e44f2c5c&itok=jJbjn5HI)
The cost of borrowing overnight cash in the US Treasury repo market popped 147% from the open on December 31 to an intraday high of 7.25% – an “extraordinary” move that some blame on the US government’s decision to issue $51 billion of debt on the last trading day of the year.
The general collateral (GC) repo rate closed at 4%, up 107 basis points on the day. “Forward rates a few days ahead of the turn were indicating 285bp, but on December 31 the markets opened around 3% and peaked at 7.25%,”
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