Odaily Planet Daily reports that the lack of direct response to recent market pressures has led to active trading in SOFR futures-Federal Funds Rate basis spreads, while other rates in the repo market remain high. Wall Street strategists warn that funding pressures will persist into November as reserves decline and more Treasury bill issuances inject collateral into the market.

Mark Cabana, head of U.S. interest rate strategy at Bank of America, said that continued pressure will eventually force the Federal Reserve to inject additional liquidity ahead of its December meeting.

"The Fed's decision to hold off on liquidity injections may stem from its belief that the current funding pressures are temporary," Cabana wrote in a client report. "However, we believe this is unlikely. As quantitative tightening continues, funding pressures are likely to persist and intensify." (Jinshi)