U.S. Treasury · Federal Reserve (FED) · Bitcoin · New York · CryptoSlate
Treasury dealers’ financing burden can outlast their bond holdings, Fed study flags
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Federal Reserve staff research published Oct. 30 finds that Treasury dealers can keep financing customers' bonds after their own auction inventory has largely cleared.
Key facts
- New York Fed observations put the Secured Overnight Financing Rate, or SOFR, between 3.92% and 3.95% across the five business days from Oct. 23 through Oct. 29
- The Federal Home Loan Bank of New York's Oct. 30 update cites a 3.90% interest rate on reserve balances and attributes SOFR trading above it to Treasury supply, month-end and Canadian year-end
- Its main regression sample covers eight large bank-affiliated dealers from January 2016 through June 2025
- Federal Reserve staff research published Oct. 30 finds that Treasury dealers can keep financing customers' bonds after their own auction inventory has largely cleared
Summary
01 Fed research using 2016–June 2025 data finds client financing can persist after Treasury dealers' inventory effects fade. 02 SOFR ranged from 3.92% to 3.95% on October 23–29; FHLBNY described financing conditions as tranquil. 03 Bitcoin spillover needs a link to worsening crypto credit; futures basis and perpetual funding measure different things. The study estimates that each dollar of Treasury coupon issuance expanded dealer balance sheets by about 21 cents, with roughly two-thirds attributable to client financing.