Record year-end repo tightening

December 31, 2025 at 21:00 UTC

5 min read

SRF and RRP record volumes with US equities decline on year-end repo tightening

Key Points

A record SRF draw and heavy RRP placements tightened intraday liquidity and put upward pressure on short-term funding spreads during year-end balance-sheet management.
Tighter intraday liquidity and funding spreads coincided with U.S. equity weakness as major benchmarks closed lower amid heavy year-end repo activity.
Sector ETFs were broadly weaker, with technology and basic materials among the weakest while utilities and communication services were relatively less weak.
Multiple completed and announced transactions closed across mining, software, automotive and multifamily real estate, reflecting active deal flow reported today.

Global Market Summary

US equity benchmarks closed lower as the S&P 500 (SPX) fell 0.51% and the Nasdaq Composite (^IXIC) slipped 0.55%, with the Dow Jones Industrial Average (DJIA) down 0.44% amid heavy year-end repo and reverse‐repo flows that tightened short‐term funding. European markets eased—CAC 40 (FRA40) -0.23% and FTSE 100 (UKX) -0.09%—while in Asia the Shenzhen Composite (000001.SS) was roughly flat (+0.09%) and the Hang Seng (HSI) declined 0.87%.

Top Movers

AXSM (23.40%) led gainers, followed by PSNY (9.98%) and ONDS (9.57%). CORT plunged 49.38% with QXO (-7.68%), RGC (-7.23%) and NIO (-6.82%) among the largest decliners. Sector ETFs were broadly weaker: technology (VGT -0.70%) and basic materials (XLB -0.67%) were among the weakest while utilities (XLU -0.34%) and communication services (XLC -0.39%) were relatively less weak.

Macro highlights

The New York Fed's Standing Repo Facility recorded a record $74.6 billion in loans while counterparties placed $106 billion into the reverse repo facility, backed by $31.5 billion of Treasuries and $43.1 billion of mortgage‐backed securities. Officials said flows reflected year‐end technical balance‐sheet management rather than a change in policy, but the simultaneous SRF draw and large RRP placement tightened intraday liquidity and put upward pressure on short‐term funding spreads. Market participants will monitor reserve levels and RRP drainage for normalization into early January.

News that moved markets

Multiple completed transactions closed today, including MagIron's purchase of the Reynolds Pellet Plant, Qvantel's acquisition of Optiva, Elevest Capital's completion of Fund 63 (a 97‐unit multifamily acquisition), Linamar's acquisition of Georg Fischer’s Leipzig facility, and Galantas Gold's acquisition of RDL Mining Corp. Announced deals included INCERGO S.A.'s advance of a merger with Visual Semiconductor, Smart Share Global's shareholder‐approved merger, and Java Holdings LLC's acquisition of +Peptide.

Upcoming session watchlist

KR S&P Global Manufacturing PMI (DEC) forecast 49.9 vs 49.4 prior, Jan 02, 12:30 AM | Indicates manufacturing activity and demand, informing near-term growth momentum.
ID Balance of Trade (DEC) consensus $2.5B vs $2.4B prior, Jan 02, 02:00 AM | Measures net exports and external demand, affecting growth and currency.
GB Nationwide Housing Prices YoY (DEC) consensus 1.2% vs 1.8% prior, Jan 02, 07:00 AM | Tracks annual house price change and demand, informing inflation and consumption.
GB Nationwide Housing Prices MoM (DEC) consensus 0.1% vs 0.3% prior, Jan 02, 07:00 AM | Shows monthly house price movement and demand; signals short-term momentum.
ES HCOB Manufacturing PMI (DEC) consensus 51.1 vs 51.5 prior, Jan 02, 08:15 AM | Reflects Spanish manufacturing activity and demand, indicating growth momentum.

Key Takeaways

U.S. benchmarks closed lower: S&P 500 (SPX) fell 0.51%, Nasdaq slipped 0.55% and the Dow declined 0.44%, amid heavy year-end repo and reverse-repo flows.
The New York Fed's SRF recorded $74.6 billion in loans while counterparties placed $106 billion into the RRP, tightening intraday liquidity and pressuring funding spreads.
AXSM led gainers with a 23.40% jump while CORT plunged 49.38%; sector ETFs were broadly weaker, with technology and basic materials underperforming.
Several completed and announced deals closed, including MagIron's purchase of the Reynolds Pellet Plant, Qvantel's Optiva acquisition and a 97-unit multifamily fund closing.