Bank Strains Raise Specter of Quarter-End Tension in Repo Market

The approach of quarter-end is adding some extra fuel to pressures in funding markets that are already on alert for potential trouble amid the ongoing upheaval in US banks.

Some of the biggest anomalies within repurchase agreements — a key funding market — have historically occurred around quarter-end periods. And with the US banking system in flux right now, there are signs that borrowing costs around that turning point are ticking up.

Overnight repo rates for the end of the quarter were trading around 5% on Monday, according to ICAP pricing. That’s notably above the 4.80% that the Fed itself ...