$20.35 BILLION Borrowed from the Lender of Last Resort this morning! They will have to panic-react …. Again!

by

The SOFR-IORB spread measures the difference between the Secured Overnight Financing Rate (SOFR, a key repo market benchmark) and the Interest on Reserve Balances (IORB, what the Fed pays banks on reserves). A record +37bps spread suggests potential liquidity strains in short-term lending markets, as SOFR isn’t falling with Fed rate cuts. If it persists beyond month-end, it could signal the need for Fed interventions like repo operations or quantitative easing to stabilize funding. For latest data, check http://federalreserve.gov.
-GROK

Shadow banking bubble risks global shock, warns credit rating agency

The $3tn (£2.2tn) shadow banking industry has developed “bubble-like characteristics” that could risk triggering a wider global financial shock, the credit ratings agency Fitch has warned.

Fitch said that if a crisis took hold in the private credit market, then it could ripple out to fund managers, banks and insurers who bankroll the market.

The warning, issued this week, adds to a drumbeat of concern after the $12bn collapse of US auto parts giant First Brands was followed by two regional US banks sounding the alarm over bad loans.

This has prompted fears that the incidents could be symptomatic of more serious problems in the market.

Private credit involves companies borrowing from specialist funds, often run by private equity. Compared with traditional bank lending, there is less regulation and transparency.

The market’s size has ballooned 50pc in recent years, and the International Monetary Fund estimates that banks worldwide now have about $4.5tn of exposure to private credit players, not all of which has been drawn down.

Australian Treasurer Sounds Investor Alert as Global Risks Mount

Uh-oh! It looks like you're using an ad blocker.

Our website relies on ads and the generous support of readers like you to keep delivering free, high-quality content. Right now, we are facing serious funding challenges and we need your help more than ever. Disable your ad blocker and this message will vanish. You can also sign up for a membership to enjoy an ad-free experience while supporting our work: https://citizenwatchreport.com/plans/subscriptions/ Your support helps us stay independent, continue our work, and keep content free for everyone. We truly appreciate your understanding and thank you for standing with us.