Eurodollar University Repo Fails Skyrocketing!! Is Something Big Happening?
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Dec 27, 2025 Repo fails have skyrocketed to over $300 billion, signaling significant issues in the financial system. As collateral becomes increasingly scarce, the podcast reveals how this situation affects everything from Treasury inventories to private credit. The discussion also highlights the growing stress in private credit markets and the implications of withholding collateral, potentially leading to cascading delivery failures. With market skepticism rising, it’s clear that liquidity concerns are mounting and investors are on high alert.
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Repo Fails Signal Systemic Collateral Strain
- Repo fails surged above $300 billion in mid-December, signaling system-wide collateral strain.
- That spike is the highest non-quarter-end level since June 2023 and suggests dealers are pulling back systemically.
Dealer Tightening, Not Just Shorting
- Persistent repo fails since August point to dealers tightening terms rather than isolated security shorts.
- Increasing fails reflect cascading delivery breakdowns as dealers withhold scarce collateral.
Study Collateral Flow Mechanics
- Learn why collateral matters by studying Eurodollar mechanics and dealer functions.
- Use that understanding to monitor flow characteristics that signal systemic risk.