By Davide Barbuscia
NEW YORK (Reuters) – U.S. short-term funding costs rose slightly this week due to tax-related outflows and demand for cash to finance the Treasury’s debt issuance, but market participants said there was no indication of broader liquidity issues.
Monday was the U.S. federal government deadline for income tax returns, which is generally associated with a drop in financial sector liquidity as individuals draw down cash from bank deposits and money market funds to pay their taxes.
The Secured Overnight Financing Rate (SOFR), the main measure of the cost of borrowing cash overnight collateralized by Treasury securities, was up only one basis point on Monday, at 5.32%, Federal Reserve data showed on Tuesday.
Another gauge measuring the borrowing costs on loans between banks and other participants in the U.S. repurchase agreement (repo) market showed a showed a larger, though still not dramatic, uptick. The DTCC…
