Money market chaos in September 2019 sparks funding rate spikes
The mid-September 2019 market events in the U.S. money markets saw a spike in funding rates and the federal funds rate breaking its target range. Two main factors contributed to these events: a shortage of reserves for some banks and increased costs for large dealers, leading to higher borrowing costs. The market faced challenges in efficiently allocating reserves and experienced a temporary reduction in lending from money market mutual funds.