End-of-month outflows intensify, overnight repo rate opens stronger at 3.69%, U.S. Treasury financing pressure persists

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汇通财经2026/05/29 12:51

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The overnight general collateral repo rate opened on Friday up 3 basis points to a buyer quote of 3.69%, mainly driven by settlement of the reissuance of 2-year floating-rate notes and 10-year Treasury Inflation-Protected Securities, resulting in about $43 billion in cash outflows.
Settlement of 2-year, 5-year, and 7-year Treasuries on Monday will bring another approximately $68 billion outflow, with around $16 billion in Treasury bill settlement outflows on Tuesday; therefore, the overnight rate is unlikely to see a significant drop.
The repo rate is expected to range between 3.69% and 3.64%. After afternoon repo operations, the overnight rate may stabilize near 3.70% before Monday's settlement. If it breaks below 3.64%, the 10-day average starting level of 3.55% will become the support level.
Except for the 3-year tenor, premiums for Treasuries of all other maturities range from 6 to 14 basis points, reflecting extensive use of hedging due to falling prices. Federal funds futures show a 94% probability that the Federal Reserve will not hike rates at the June meeting.
Short-term overnight index swap pricing indicates a 33% probability of a 25 basis point rate hike within the next 90 days. SOFR futures remain narrowly volatile and are unaffected by the 1.7% drop in spot oil prices.

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End-of-month outflows intensify, overnight repo rate opens stronger at 3.69%, U.S. Treasury financing pressure persists

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