Money Market Rates #primers

Money markets are markets for lending and borrowing money efficiently. For this to occur, dealers must provide liquidity by running “matched books,” which look like a typical balance sheet (where assets equal liabilities). Dealers borrow cash using a repo and lend it out in a reverse repo, earning a profit from the spread they charge — the difference between the rate they lent and borrowed.

Going forward, everything makes a lot more sense when you think in terms of liquidity providers making markets (and trying to earn a spread) by intermediating between cash borrowers and cash lenders.

We simply cannot emphasize enough how crucial money markets are in the modern, heavily financialized, global economy. Particularly in the short-term dollar funding (repo) market.

Now, with that in mind, let’s decipher each repo market rate:

> Private repo rates:
> Triparty repo rates
> GCF repo rates
> DVP repo rates
> Sponsored repo rates
> NCCB repo (NCCBR) rates

(Higher resolution infographic)

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