Traders are scrambling to discern what caused an unexpected rate spike in a vital but murky part of the financial system—the market for repurchase agreements, known as repo.
What is the repo market? A repo is when one party lends out cash in exchange for a roughly equivalent value of securities, often Treasury notes. This market exists to allow companies that own lots of securities but are short on cash to cheaply borrow money. And it allows parties with lots of cash to earn a small return while taking little risk, because...
Regardless of the reason it happened in the US, it has been happening elsewhere with the US dollar shortage, stunting trade and denting demand given the over reliance on it globally.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more: