On New Year's Eve 2025, the Federal Reserve suddenly injected $74.6 billion of liquidity into the market, setting a new record. This figure broke the previous record of $50.35 billion set two months earlier on October 31, with $31.5 billion secured by government bonds and an additional $43.1 billion backed by mortgage-backed securities (MBS).

The timing of this operation by the New York Fed was not accidental. Under year-end settlement pressures, the overnight general collateral repo rate jumped directly to 3.95% at the open, exceeding the upper limit of the Federal Reserve's target rate corridor by 20 basis points. This indicates that interbank funding conditions suddenly tightened.

However, market analysts believe this is more a routine operation by financial institutions—responding to regulatory requirements and settlement pressures at year-end. It is not necessarily a warning sign of a structural crisis.

The real trigger was the abnormal volatility in the money market. The secured overnight financing rate (SOFR) recently surged to a two-week high of 3.77%, and on Wednesday morning, the repo rate even spiked to around 3.9%, clearly surpassing the 3.75% rate offered by the Federal Reserve's standing repo facility (SRF).

This spread is crucial. When the cost of open market financing rises, financial institutions naturally turn to the Fed's standing facilities to reduce borrowing costs. Market participants pointed out that, considering the relatively moderate funding environment before year-end, this sudden increase in funding costs indeed drew institutional attention.