U.S. Banks Warn of Renewed Pressure in Money Markets

According to BlockBeats, several Wall Street banks have issued warnings about potential renewed pressure in the U.S. money markets, which could prompt the Federal Reserve to take swift action to curb a new surge in short-term interest rates. Although short-term financing rates have stabilized this week, last month's signs of tension in key financial system areas have raised concerns among bankers and policymakers. Market participants remain apprehensive about the risk of repo rates jumping again in the coming weeks. Deirdre Dunn, head of rates at Citibank and chair of the Treasury Borrowing Advisory Committee, expressed skepticism, stating, "I don't think this is just an isolated anomaly lasting a few days." Scott Skyrm, Executive Vice President at Curvature Securities, noted that while the market has "returned to normal," partly due to banks utilizing the Federal Reserve's financing mechanism to alleviate money market pressure, "financing pressure will likely resurface by the end of next month and year-end." Meghan Swiber, a rate strategist at Bank of America, highlighted the aggressive scale of Treasury issuance, which is historically high and could deplete traditional investors' demand for Treasuries. To better balance Treasury supply and demand, Swiber suggested that a long-dormant buyer might need to step in: the Federal Reserve.