The use of the Fed’s overnight lending facility, long seen as a measure of excess liquidity in funding markets, has dropped to a four-year low, according to Bloomberg. While he doesn’t foresee a repeat of the September 2019 episode—sometimes described as a ‘repo revelation’—he does expect higher overnight funding rates to become entrenched. As a sign this is already happening, overnight rates rose well above the Fed’s target rate in early September and have remained high since. Persistently elevated funding costs represent new territory for a market long accustomed to stable rates since the 2008 financial crisis. Over time, it affects access to cheap short-term financing for everyone, trickling down to businesses and individuals and offsetting the benefits of the Fed’s rate cuts.