Will the Markets Turn South This Week?

Flying under the radar (for far too long) is the ongoing stress in the REPO market, raising its ugly head and causing us to wonder if this is the week the markets turn south.

For those unaware, our REPO market is the short-term funding markets that move trillions of dollars in overnight cash and securities each day.

As a result, the REPO markets are critical to the smooth functioning of the financial system.

Because when they seize up, the consequences ripple outward into Treasury trading, bank liquidity (or illiquidity) management, and even the implementation of monetary policy.

The last time the repo market buckled was in September 2019.

It happened suddenly and dramatically: overnight borrowing rates spiked from around two percent to more than eight percent, exposing how fragile the post-crisis liquidity framework had become.

And prior to that we remind you of how the REPO’s experienced a catastrophic “run” during the 2008 crisis.

Remember that?

Ironically (or NOT) most people don’t realize how the 2008 meltdown actually worked…and the role of REPOs in the crisis.

Let me explain:

As the value of mortgage-backed securities plummeted, lenders grew wary of the collateral held by investment banks and refused to renew their repurchase agreements (repos).

This massive withdrawal of funding crippled firms and accelerated the spread of the crisis.

Markets Turn South?

It was 17 years ago when we witnessed the near total destruction of our financial system. And to this date most investors still haven’t figured out how fragile our bond market is or what role it played in the meltdown.

Investors – and most of the public – only remember the devastation that took place in the stock markets.

And today, it’s worth noting how, in mid-September 2025, the Federal Reserve’s Standing Repo Facility (SRF) was tapped for roughly $18.5 billion in a single day.

That was its largest draw since inception — suggesting that banks were again leaning on official backstops for liquidity.

Unfortunately, most of the Gurus and wannabe Guru’s solution to this impending problem is the same solution they (along with politicians) select for every catastrophe on Wall Street.

And that solution is to print more money.

But in this case, you can almost see Roy Scheider (in the movie Jaws) at the back of his boat saying:

“We’re going to need a bigger money printer…”

Please understand we are not calling for a major long-term market crash here that turns this into a bear market.

But it very well could be the false move before the big one.

So, it wouldn’t hurt to raise some cash…soon…Hint, Hint.

That way you can take advantage of unexpected dips in the markets.

Learn where some of the best opportunities await in our upcoming November newsletter (HERE).

Share this with a friend…especially if they don’t know what the REPO market is.  They’ll thank YOU later.

And tell them:

We’re Not Just About Finance

But we use finance to give you hope.

“And you shall know the truth, and the truth shall make you free.”

~John 8:32~