Business & Finance
Soaring US Equity Funding Costs Risk Spilling Over to Repo Rates
Key Points
Soaring US Equity Funding Costs Risk Spilling Over to Repo Rates US equity financing needs have been building up and risk crowding out capacity in bank dealers’ balance sheets, which in turn could boost short-term interest rates even amid limited quarter-end pressures. As the end of the first half is approaching, equity financing costs have soared near levels resembling pressures typically seen around the end of the year. A series of blockbuster share offerings, including the record-breaking...
Soaring US Equity Funding Costs Risk Spilling Over to Repo Rates
US equity financing needs have been building up and risk crowding out capacity in bank dealers’ balance sheets, which in turn could boost short-term interest rates even amid limited quarter-end pressures.
As the end of the first half is approaching, equity financing costs have soared near levels resembling pressures typically seen around the end of the year. A series of blockbuster share offerings, including the record-breaking listing of SpaceX, rising stock market valuations and massive growth in leveraged exchange-traded funds have contributed to the surge in costs.
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