repo funding rates don't affect US treasury yields immediately due to time scale

repo funding rates don't affect US treasury yields immediately due to time scale

treasury bond yield expectation is over 10 years, and repo rates are a short-term debt funding mechanism

so the rates shock would need to be prolonged/pronounced to affect treasury rates

Illya Gerasymchuk 2025-07-07 18:17

funding rates on repo markets & bond yields are not the same

different timescales:
1️⃣ repo - short-term / ≈day(s),week(s)
2️⃣ treasury bonds - ≈10 years

so even if a funding rate raises for a few days, the longer-term bond yields may not be affected