OFR Short-term Funding Monitor - Market Digests


Interest rates measure the cost of funding. They can act as indicators both of short-term costs of capital for financial intermediaries and of stress in funding markets. These charts present interest rates across various short-term funding markets and types of funding.

Yields on money market fund investment holdings of repos by collateral type

Dollar-weighted median yields on money market fund investment holdings of repos by collateral type

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Money market funds are a type of mutual fund used for cash management by institutional and retail investors. As a group, these funds are the largest cash lenders in short-term funding markets. Money market funds provide liquidity to the markets. This liquidity allows issuers of short-term debt securities, such as corporations and governments, to roll over their financing.

This chart shows the dollar-weighted median yield on money market fund investments in repurchase agreements (repo) backed by collateral, either U.S. Treasuries, debt issued by Federal Agency and Government-sponsored Enterprises (GSEs), or other securities. The yield a money market fund receives on a repo investment is effectively the counterparty's cost of borrowing cash from the fund using repo backed by a particular collateral type. Higher-quality collateral is more likely to be accepted by a broader array of counterparties, which can lead to lower financing costs on average. In some forms of repo, the repurchase agreements specify a range of securities that can be used as collateral. This allows dealers to finance these securities, including equities and exchange-traded funds (ETFs) in some cases, by borrowing cash from money market funds using other repo. The spread between yields on repo backed by different collateral types can indicate the relative demand for financing on different collateral terms from dealers and other counterparties.

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Suggested Citation

Office of Financial Research, “OFR Short-term Funding Monitor,” refreshed daily, https://www.financialresearch.gov/short-term-funding-monitor/ (accessed ).