Is a repeat of the 2019 repo crisis brewing?

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Is a repeat of the 2019 repo crisis brewing?
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Pain and SOFRing

At the end of September there was a big spike in the Secured Overnight Financing Rate. This may already be putting you to sleep but it’s potentially a big deal, so please stick around. SOFR was created to replace Libor . It measures the cost of borrowing cash overnight, collateralised with US Treasuries, using actual transactions as opposed to Libor’s more manipulation-prone vibes. You can think of it as a proxy of how tight money is at any given time.

LCLOR stands for “lowest comfortable level of reserves”, and might require a bit more explanation. Back in ye olde times , the Fed set rates by managing the amount of reserves sloshing around the US monetary system. But since 2008 that has been impossible due to the amount of money pumped in through various quantitative easing programmes. That has forced the Fed to use new tools — like interest on overnight reserves — to manage rates in what economists call the “abundant reserve regime”.

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