The 2019 US repo rate spike and Treasury settlement
Separate reserve balances from borrowing demand in the 2019 US money market episode when corporate taxes and Treasury settlement coincided.
Updated Nov 10, 2026
Cash left the market as dealers needed more funding
Corporate tax payments coincided with Treasury auction settlement on 2019-09-16. Tax payments shifted cash into the Treasury General Account, while settlement raised dealers’ need to finance their Treasury inventories. SOFR jumped to 5.25% the following day.
Repo operations and reserve management
The New York Fed supplied short-term funding through repo operations after rates spiked. On 2019-10-11, the Fed announced Treasury bill purchases and term and overnight repos to maintain ample reserves, distinguishing those steps from a change in policy stance.
Track reserves, cash movements and lending capacity separately
This episode shows how rapidly funding rates can move when cash available to lend falls just as borrowing demand rises. Reading reserve totals alongside tax and Treasury settlement dates and intermediaries’ ability to lend gives a clearer picture of how pressure builds.
Reserve thresholds and equity returns vary across episodes
The distribution of reserves, composition of intermediaries and Fed operating tools can differ across periods. This episode alone cannot identify a general reserve threshold for repo spikes or establish subsequent equity returns.
Sources
- Federal Reserve, What Happened in Money Markets in September 2019?Accessed Nov 10, 2026
- New York Fed Staff Report, The Market Events of Mid-September 2019Accessed Nov 10, 2026
- Federal Reserve, Statement Regarding Monetary Policy ImplementationAccessed Nov 10, 2026