Year-End Repo Spike Revives Concerns Over Hidden Banking Stress
The Federal Reserve's Standing Repo Facility saw an unprecedented $74.6 billion draw on December 31, 2025 - the largest emergency cash injection since the 2019 repo crisis. Overnight funding rates spiked to 3.77% (SOFR) with GC repo touching 3.9%, signaling year-end liquidity strains that market veterans compare to pre-pandemic stress episodes.
This surge follows September's $26 billion bank cash grab, creating what traders call a 'binary scenario' for risk assets in January. The pattern mirrors 2019's repo market seizure that preceded both COVID-era disruptions and 2023's regional banking crisis.
Crypto markets remain oddly detached from these warning signals. Bitcoin and major altcoins continue trading without pricing in potential contagion risk, despite historical correlations between repo stress and digital asset volatility.
