At first glance, everything seems under control: stocks are holding steady and the U.S. economy is resilient. And yet, something is going wrong in the global financial system. In recent days, the cost of very short-term cash – the SOFR (Secured Overnight Financing Rate), which measures how much it costs to borrow money overnight – has risen sharply. The SOFR overnight rate, which measures the actual cost of money between institutions, now exceeds the IOR rate – the rate the Fed pays banks on their reserves. This spread, the largest since the beginning of the current monetary cycle, shows that it is now more expensive ... (full story)