Fed Policy Benchmark’s Rise Fuels Funding Concerns, QT Debate

The effective federal funds rate edged higher for the third time in a month underscoring mounting strain in short-term funding markets that could ripple across fixed income and potentially speed up the end of the Federal Reserve’s portfolio unwind.

The Fed’s benchmark rate rose one basis point to 4.11% from 4.10% the prior session, New York Fed data released Friday show. It remains within the Federal Open Market Committee’s 4% to 4.25% target range, set last month when policymakers cut borrowing costs by a quarter-percentage point. Until September, the rate had hovered near the bottom of the band for much ...