SOFR
Amplify ETF Trust - Amplify Samsung SOFR ETF
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Most public analysis is reflexive—it reacts to the same lagging government data (CPI, NFP, GDP) using the same basic frameworks. Ignore this completely, its just noise and heavily controlled narratives. To develop a differentiated view, use the four pillars of "Macro Edge". * **Growth**: Analysis of economic expansion and key drivers such as AI-driven capital expenditure or policy shifts like tariffs. * **Inflation**: Assessment of inflationary pressures within the economy, considering factors such as policy shifts and the actions of central banks like the Federal Reserve. * **Risk Premia**: Evaluation of volatility and asset allocation in uncertain environments. * **Flows**: Examination of how major capital flows and corporate actions (e.g., buybacks) shape the direction of the market. You'll want to monitor: **TGA & RRP:** Track the Treasury General Account and the Reverse Repo Facility. When the TGA drains, it injects liquidity into the system; when it refills, it sucks liquidity out. **Real-Time Liquidity Proxies:** Watch the **SOFR (Secured Overnight Financing Rate)** and credit spreads (like the **ICE BofA US High Yield Index Option-Adjusted Spread**). Divergence here often signals stress weeks before it shows up in official growth data. **The Eurodollar Market:** This is the "shadow" global banking system. Spreads in Eurodollar futures can indicate global dollar shortages that the Fed hasn't yet acknowledged. **Truflation** / **Turnleaf Analytics** for Real-Time Inflation data **LinkUp** / **Indeed Hiring Lab** for labor statistics **Freightos Baltic Index** Real-time container shipping rates. Monitor them for any sharp drop which often precedes a collapse in goods-based inflation. \--- Predictive markets and primary sources are surprisingly more accurate than bank analysts who are incentivized to stick to certain narratives. * **Prediction Markets:** Sites like **Kalshi** or **Polymarket** force participants to "put their money where their mouth is" regarding Fed moves or GDP prints. When these odds diverge significantly from "Expert Consensus," pay attention. * **Primary Source "Diffing":** Instead of reading a summary of the Fed Minutes, use an ai tool to "diff" (compare) the text of the new minutes against the previous ones. Changes in specific words (e.g., changing "substantial" to "moderate") are often the only signals that matter. * **The "Beige Book":** This is the Fed's own anecdotal evidence from 12 districts. It often captures a "vibe shift" in business sentiment that hasn't yet shown up in the hard math of the GDP reports. \--- summarized via gemini - re-spliced by me.
I don't think so, solely because he still needs an exit strat to bail out the investors in XAI that bailed out the investors in Twitter, and it's much harder to do that via SpaceX than Tesla. With SOFR at these lows XAI is at a bit less of an insolvency risk than it was prior, but they still have the fixed rate 13% debt and even the SOFR+750 isn't low by any stretch. At a burn rate of >1bn/mo the cash from equity issuance is used up quicker than one would think and they're maxed out on debt. Any downturn in hype on AI and Musk has to chose between using Tesla to bail-out investors or telling them he fucked up and they need to take negative returns or potentially even write the whole thing off. History shows he'll pick the former.
Look up the differences between the fed funds rate and SOFR. That’s your answer
They are being reactive. SOFR started popping above the fed funds rate, which is *very* bad, because it means there is not enough demand for the govt's short-term bills at the Fed's targeted rate. Essentially, the govt just had a failed bond auction.
>bankers and VC firms who all took out billions upon billions of cheap debt leveraged against their own wealth capitol. Do you have a source on #s and how it compares to VC leverage today? >We saw the beginning of the liquidity issues just before Thanksgiving. The only evidence I've seen is some use of the standing repo facility and modest use of the discount window. Very small jumps in SOFR. What I mean by crash is something that would take us into a bonafide recession (due to credit seizing up) without intervention soon had Fed not injected with RPM. Is that what you mean?
Sorry about not being clear and causing more confusion. Whether a HYSA is right for you or not is dependent on what type of financial services you need from a FI (financial institution) and your personal financial situation. I personally have no use for a HYSA and they offer no value to me and my families situation. A HYSA is a bank savings account. That is very different than a brokerage account. Both serve different purposes. And they work very differently and they are regulated differently in the US. Brokerage accounts are for investing. And you can invest in anything from safe risk-free interest rate products like US treasuries and money market funds to highly speculative and leveraged derivative products like options and futures. Bank savings accounts are just what it means. It's a way to put cash into a bank for safety and savings. In some cases, you can get interest at the prevailing risk-free rate. The term "risk-free rate" refers to the rate that considered risk-free for some measure of time. The hypothetical proxy for the "risk-free rate" is considered US sovereign debt. Most often - the 3-month US treasury rate is used. As of today it's about 3.74% but will vary daily. Or sometimes the SOFR (secured overnight financing rate) which as of today is 3.93%. Since the Fed cut the Fed overnight rate today by 25 basis points. Short term rates will likely adjust down. It's called "risk-free" because because the interest rate markets consider US sovereign debt as having a smallest risk of default for US domiciled investments. As for brokerages that are considered well respected - the usual ones are the big ones like Schwab and Fidelity. Look through the subreddit. However - many major bank holding companies that offer bank services also have brokerage businesses which can be convenient like Bank of America/Merrill, Morgan Stanley/ETrade, PNC, Wells Fargo, etc. etc. Your choices really depend on the type of services that you need. If you are inexperience, I recommend you stick with FI's that have very good customer service with phone services. And ideally with a branch that you can go to if you have issues. Hope that makes more sense. You can scroll up - look at the Getting Started link for investing resources.
QE was awesome post-covid. Now we get it at all-time highs! This is not crazy at all! /s But, I think we have learned that the Fed was super nervous about the clusters in spikes in SOFR rates, which was a genuine liquidity issue, possibly shutdown related, we'll never know. I took that as a signal that the Fed would surely cut, not that they would start buying treasuries. I'm not knocking gold, silver, and copper at all, I have exposure to all, but I think the vast majority of loan-created money will go to the place it has been reliably going the last three years: AI infra. Even Jamie D is blunting JPM earnings to invest in that vertical. For the bubble bears: If you've been bearish all along, you're bearish for the same reasons now that you were three years ago: the train might stop. But, your bias shouldn't be prove the train won't stop and I'll get on, but prove to me that it will stop and I'll start to disembark. The Fed has the back of the stock market, even though the stock market absolutely does not need it. Corporate bonds are fine, outside OAI-adjacent stuff. The dollar hasn't tanked. Inflation is not about 3%... yet. Monetization of AI is best measured by API calls. Companies pay for those. That is exploding for every player, except maybe OAI losing some share to GOOG. Inference is the monetization wave and is now most compute demand. ASICs are probably the future, but NVDA has some ASICs build into GB300s already for long context windows. Crucially, there is a memory shortage now. If models stay the same size, all those new API calls need more memory to run. Except models don't stay the same size. Sparse mixture of expert models still improve when they have a larger RAM footprint, and quantization of large models reliably increases halluncinations and degrades performance. That memory will come from MU, SK Hynix, and Samsung. EWY has an uber low PE and is 40% Hynix and Samsung. This is the safest Sharpe ratio bet in the world, but it won't pay out as much as MU. If you held memory stocks in past shortages, you know what a wild ride that can be. This is a secular shortage. Fabric (ethernet/NVlink/optics) and GPUs might still be the bottleneck for training, but probably not, but training was the the bottleneck pre-2025. The current and destination bottleneck is high-band RAM, and the fundamentals of these companies scream bottleneck. Anyway, crystal ball comment, not advice, yada yada. Feel free to come back and mock me if I am wrong.
Solid effort, but most target taking out 3-6%, not 10%. Also, interest rates are higher than 4% right now (I.e. I was recently offered 5.91% which is overnight SOFR + 2%). You're kinda on the right track, but reality is a bit different than this, because the idea you presented is way too risky with far too much debt down the road. I.e. what happens when the market drops significantly in later years (as debt to assets increases) and you then lack the securities backing for your debt? You get margin called and are totally screwed. Better method: use the dividends you're already getting (best to minimize these) and then simply sell long term gains for whatever else is needed (and even if you don't need the amount in (1) below, still sell that amount to increase your cost basis). Taxes? Nope: 1) There's zero tax on LTCG below $96,700 (married filing jointly). 2) You still have your standard/itemized deductions to work against dividends and other income. 3) If you need anything above that THEN you borrow money against securities (or get a mortgage loan) to buy rentals, commercial real estate, businesses, etc. Then you use things like cost segregation studies, bonus depreciation, section 179, etc. to deduct 25-100% of your newly purchased real estate, assets, business expenses, etc, which themselves will make money for you. This allows you to pull in an additional $313k (the EBL - "excess business loss" limit) tax free. Anything beyond that, well... there's still things you can do, but I'm thinking \~$450k/yr tax free in today's dollars is sufficient income for most people. ;)
SOFR is higher than fed funds rate, what are you talking about?
For a secured line of credit, the interest rate is currently around 7%. Its the only way I can explain it. Sometimes a bit lower or higher depending on the size of the portfolio. A few years ago they were very low, but they are variable depending on either Prime or SOFR, which are high right now.
I got news for you, the ultra wealthy can negotiate with any private bank and get rates of SOFR + 0.75% or even 0.50% on their asset backed loans.
I mean, its not like a 25 bps cut will have any impact on the massive overspend on ai buildout. Although CRWV data center debt in their SPEs with Softbank is at SOFR + 8%, so a quarter point on $5 billion is $12.5 million savings. Still Not enough to make them profitable.
Alerts set for USD/JPY if it breaks below 152 and hits 150 same day. Alerts set for VIX spike above 25 and 27. Alerts set for SOFR/3 month crossing over 4.15%. Liquidating half my positions to avoid a margin call based purely on panic only to watch us hit ATH right after? Now that’ll be priceless.
That's what I've been keeping an eye on. Things could get prickly if SOFR-EFFR spreads are high Monday morning. Volume's gonna tell a lot of stories as well especially after the CME issues on Friday.
i don’t think people realize how razor thin liquidity is atm CME being down for any extended period is terrible. Absorbing these trades could be tough If Treasury futures and SOFR rate spike when this opens back up it could spiral quickly perma bull, but we may finally get my repo crisis
NY fed has SOFR, EFFR, Repo numbers. It's all available online. DTCC has failed treasury rates, those need to stay below 50B per day as well.
Which is scary to think about. If we're already having this issue with repos flying out what's gonna happen if things change up? Especially if feds cut rates and BOJ still hikes, spreads are gonna be tough to work with. SOFR's hiking up more and more.
Carry trade is in short the borrowing of funds from the Japanese markets with low interest rates (currently 0.5%) to finance activity and trading in the US markets which have high interest rates (5% at a point). On the 19th of December there is a (good) chance the BOJ is going to hike rates due to the Japanese economy being in a less than favourable place with inflation and a weakening Yen. If they do that, a good source of liquidity (the margins they had at least) will be removed and that could tip something off in the basis trade side of things. The basis trade is hedge funds shorting treasury futures and paying back par value at the end (they make like 10c per trade). This trade is levered up to such a high degree(50-100x) that there is a concern regarding cost of borrowing and what would move the trade from even slightly profitable to being a loss. If this flips to a loss, the price of these bonds will drop as there are no more buyers (right now it's a huge amount of hedge funds and institutions trading with each other). Banks will hold liquidity with concerns of these hfs being able to pay back or not. The banks offering the leverage to these hfs are already increasing their cost of borrowing (see SOFR vs EFFR spreads). The worry is that if the treasuries drop in value, there will be a systemic issue since treasuries are the backbone of the US financial system. Here's the interesting part: if this happens, stock market (SPY for example) could drop by 15% within days. Good news is the fed is going to hop in when things are horrible and the market will rally hard after that.
No, because you can't price in improvements in liquidity. It's a structural change to the plumbing of the financial system. As liquidity improves and things like the SOFR settle down you should naturally see asset prices increase as a result.
**Always best to know the scam before deciding it it's for you** "On November 7, 2025, the Company issued a Promissory Note (“Note”) with Streeterville Capital, LLC in the original principal amount of $7,025,000. From November 7, 2025, until December 31, 2025, interest will accrue on the outstanding balance of this Note at a per annum rate of interest equal to the daily Secured Overnight Financing Rate (SOFR) as quoted by the Federal Reserve Bank of New York. From January 1, 2026, until this Note is paid in full, interest will accrue at the rate of eight percent (8%) per annum. After original issuance fees of $25,000, the Company received cash of $7,000,000 for this agreement. If this Note is outstanding on January 1, 2026, a one-time additional interest fee of $1,050,000.00 will automatically be added to the outstanding balance. This Note matures eighteen (18) months from the issuance date with redemptions beginning at six (6) months from the issuance date. The Company intends to use the cash proceeds to complete potential acquisitions." "On November 13, 2025, Cemtrex, Inc. (the “Company”) entered into a Share Purchase Agreement (“Agreement”) with Karl F. Kiefer, an individual resident of Texas (the “Seller”), and Invocon, Inc., a Texas corporation (“Invocon”) for the purchase of Invocon. The Company expects to complete the transaction on or around January 1, 2026, and is contingent on customary closing conditions. The Agreement is for the purchase of 100% of the issued and outstanding shares of Invocon for the purchase price of $7,060,000." **Fun financial engineering there. Looks very... familiar.** [https://www.sec.gov/files/litigation/admin/2022/33-11114.pdf](https://www.sec.gov/files/litigation/admin/2022/33-11114.pdf) "7. Between approximately April 2016 and November 2017, Cemtrex engaged in three fraudulent primary securities offerings. 8. On two occasions in April 2016 and November 2017, Cemtrex sold a total of approximately $2.5 million in Cemtrex securities to an investor, which was wired to a Cemtrexbank account (the “Notes Offerings”)." And both the company and CEO ended up paying. "D. Respondent Cemtrex shall, within ten (10) days of the entry of this Order, pay a civil money penalty in the amount of $2,200,000 to the Securities and Exchange Commission. If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. E. Respondent Saagar Govil shall, within ten (10) days of the entry of this Order, pay a civil money penalty in the amount of $350,000 to the Securities and Exchange Commission. If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717." **I don't have data prior to 2019 in my database for this stock but during the time period that SEC indictment covers various press releases $CETX did pump more than 100% twice.**
SPX only has a little bit of time to retake (and hold) 6670. Otherwise, this turns into a failed bounce really quick and we'll get the next leg down. 6600 is worrisome and a complete failure of the bounce is around 6585. MMs look like they'll support an early pop and a quick rejection (think Thursday, but less aggressive). I think we'll probably get near 6660... so short dated calls will print depending where we open. If we don't even clear 60, shit is tanking. 6675 and up starts to get some supportive greeks and could mean a reversal. Holding 6720 would likely mark the end of the correction. Sadly for my calls, I'm not seeing this play out as easily as the downside. We need buyers and vol sellers who are not currently there. Things get fucking nasty if we print anything under 6500 (JPM collar stuff). As of close on Friday, there are literally no bulls in this market. Every pop is straight mechanics and some retail. No whales are shorting VIX or buying huge call positions. Skew is up. Breadth is down. SOFR shit is still fucked. *(Not a bear. I'm currently holding calls on SPX, META, NFLX etc.)*
And those are improving. TGA has another 100 billion to sell, fed is resuming not qe/qe and buying bonds with the proceeds of MBS and expiring coupons. The SOFR/IORB spread also improved by 1bp today and I expect that continue. As did equity funding costs.
Strong believer in the liquidity thesis since late OCT when the huge OI spy puts in the low 500s were placed. SOFR/OBFR/Repo have been indicative of such and statements about the DEC rate cut haven’t helped (even though I am confident they will cut by .25). Fed also has the huge stockpile in the TGA from the S/D. Holding puts for DEC. Planning to buy shares in Dec and LEAPS after Jan. Some calls for March.
The little wrinkle in the SOFR has already been dealt with lol. It was a nothing burger in the short term
SOFR, the Repo market, QT, and the TGA. All four point to tightened liquidity. QT being stopped in the future doesn't stop liquidity being tight in the present. The NY Fed even held an emergency meeting to discuss the liquidity stress: economictimes.com/news/international/us/ny-feds-secret-emergency-huddle-sparks-fears-of-brewing-liquidity-crisis-on-wall-street/amp_articleshow/125349281.cms
They were panicking selling no doubt the Fed intervened to provide liquidity SOFR is the key here
True. But SOFR (the new LIBOR) is still elevated compared to the Fed Funds Rate. When demand for overnight cash for banks exceeds its supply, the cost of borrowing, the SOFR rate, naturally rises. This means lenders would rather hold onto their cash than lend it out, even for short periods, unless handsomely compensated. This flight to quality is a classic sign of market anxiety.
Prolly 80% of the AI-data center related debt disclosures I've read recently (maybe 50+) mention Softbank as lead or co-lead. Without any special juice, the debt is at floating SOFR + 8%, ~ 12%. That means Softbank sold NVDA to earn 12%. Ergo, NVDA has peaked.
Burry got short ..as SOFR was collapsing. Stooge trying to get people on the wrong side of the trade. Cheaper credit via sofr AND incoming rate cuts. Gold moon. Tech moon. Everything moon
Bruh ..SOFR cratered. Cheaper credit. GLD calls is free money at this point
SOFR down, bonds down, plus we won't have CPI reports due to shutdown. Of course Gold will pump
What rate did you get? I was a get. I was able to get my client SOFR +75 bps at Schwab but I really wanted 60 bps
There was an article somewhere which showed the shutdown is draining liquidity. I can't link it but I'd hate to pin the negative mood on the US shutdown but it might be playing some part perhaps but not quite on the sentiment front. It's arguably a more technical thing with the shutdown impacting market liquidity. One evidence of such strain is in the SOFR, which has been on the rise since the shutdown began: It indicates that borrowing costs have risen since the shutdown started, suggesting that banks might be facing shortage of funds amid the liquidity drain mentioned. That as the Treasury General Account (TGA) continues to siphon money in but is unable to release funds because most government departments are closed. Just some food for thought.
Mortgage rates are influenced by the US10Y, not SOFR. Hell, lowering SOFR even further might cause the 10Y to raise in response. The market is going to demand higher rates on US debt if they believe there's an inflation crisis the fed isn't controlling.
It wasn't earnings, this earnings season has been one of the best ever. It's a liquidity issue. The repo market is getting tapped as liquidity tightens. It's normal for the DXY to increase and more speculative assets like crypto and tech stocks to drop. Look at the SOFR / BTC inverse correlation. The more liquidity in the system, the higher bitcoin goes. QT is being stopped because of tge liquidity issues being observed.
Liquidity is tightening, the Fed didn't print 30b, look at their reducing balance sheet, look at the increasing TGA, look at the repo market, and look at SOFR. Liquidity is objectively tightening.
Gov is shut down. Taxes are coming into the gov, but not leaving like they usually would, hence removing liquidity from the market. One would expect this to reverse when the gov opens up as everyone will get back pay and the IRS will send out tax refunds, etc. Apparently, it also impacts banking liquidity significantly. It lowers bank reserves (some complex process involving the TGA, the banks and the fed). This tightened liquidity in the banking sector then causes SOFR rates (overnight bank to bank lending) yeilds to go up... causing even more tightening of liquidity becuase of higher interbank rates. Basically, my guess is this is mostly due to the gov shut down. When that process lifts and the TGA releases all that money it's hoarding right now... markets probably rocket. But let me emphasize, I could easily be wrong as I'm no government expert.
I didn't expect this level of research to be on this sub. But yes as the SOFR rate rises about the Reverse repo and standing repo this will force the unwinding of this trade
It only takes one day of insolvency to crash the credit system and a cascade of defaults and liquidations. Theres a reason SOFR is blowing out and fed is resuming Q/E. Market plumbing is broken and the plumber (fed buying back treasuries (Q/E)) doesnt start up until december. And from a traders perspective, purely looking at price, the risk/reward entering NEW longs here is well, shite. Ide entertain longs around 6700 om SPX if it coincides with vol contracting and signs of liquidity stress easing. Until then, mostly cash and a few small shorts and puts.
It only takes one day of insolvency to crash the credit system and a cascade of defaults and liquidations. Theres a reason SOFR is blowing out and fed is resuming Q/E. Market plumbing is broken and the plumber (fed buying back treasuries (Q/E)) doesnt start up until december. And from a traders perspective, purely looking at price, the risk/reward entering NEW longs here is well, shite. Ide entertain longs around 6700 om SPX if it coincides with vol contracting and signs of liquidity stress easing. Until then, mostly cash and a few small shorts and puts.
Not the person you're replying to, but if you want to learn about and follow all this on a daily basis, definitely check out the Infranomics channel on youtube. He covers the bond market, the repo situation, SOFR spreads, pretty much exactly this type of financial plumbing ShriteFatmsIntel is refering to, and more. I have learned SO MUCH about the financial beckend from this channel and how it all works, and everything is just presented as "Here's what happened today, here are the numbers, here is how it usually works, here's what todays movement typically means, and here is how we interpret those movements and their downstream potential effects". It's one of the best macroeconomic resources I've found on Youtube. Absolutely amazing teacher.
80% of americans work for small businesses, not using/deploying AI yet small business and Real Estate get loans of SOFR + a spread, so when the SOFR (almost exactly the FED funds rate) falls, then business/RE credit expands exponentially and GDP grows and more people get hired and economy overheats and we get inflation, then FED has to raise rates, and cycle reverses. Hence the Dual Mandate which are in direct opposition. low inflation / high employment
Bonds are dumping, even with rate cut. SOFR rates are also up. Quite interesting price action.
They are stopping QT. He straight up said liquidity is a problem. They're letting MBSs roll off and buying short term Ts to replace them. If SOFR and EFF keep giving them grief, they'll inject some money.
To complicate matters, SOFR has been above EFFR ever since the last cut. An additional cut isn't going to be very effective without an injection of liquidity.
While i am serious that I do this, it was more jokingly put becuase LETFs are complicated and theres embedded costs to leverage. Imagine shorting SGOV, so youre paying 4% per year rather than getting 4%. Equity swaps cost ~SOFR+0.4% per year and an LETF thats 2x would need to hold ~1.1x swap exposure (90% stock, 10% cash used as collateral to buy 110% exposure to stock for 200% total, at a 110% short cash position). And the LETF rebalances daily to maintain 2x relative to each price at open each day. This both compounds upwards and downwards (effectively buying more swap exposure when prices rise and selling swap exposure when prices drop). This make the LETF perform superbly when volatility is low, but it makes it perform worse when volatility is high. So, you can
There’s literally nothing wrong with the financial system. Use of SOFR is good. The addicts should use SOFR. It’s not an indication of tightness, it’s an indication that excess liquidity from COVID-era QE has finally drained. This is why the Reverse Repo Facility has drained from $1 trillion to $10bn. A drained RRP isn’t a bad thing. It represents a return to a healthy norm. No such facility existed outside 2008 or 2020.
The fly you are looking at might be cheap for a reason, as you are buying a very narrow range. The ATR on the ES is above 100 points for the last week, and you are betting that the ES will finish inside a 45 point range in exactly 7 days. Since most of the value comes from the last day of trading, you are betting on the probability of hitting a very tight price range at a very specific time. Also, it is practically impossible to open a fly for a credit, as arbitrage doesn't allow you getting paid for taking on no risk. A credit fly is something you might find by taking the mid-price on instruments with very tight bid/ask spreads, like SOFR futures. Where it's not possible to get a fill on all legs that is better than the bid or ask (example mid-price on all legs), so it is important to always take the correct price for calculating the fly, and it will always be for a debit.
I'm not assuming one, SOFR is approaching highest since repo crisis and regional banks are suffering right now
SOFR at all time highs -> liquidity crisis -> yields spike -> basis trading regards that own most of our debt get fucked by forced selling feedback loop like 2020
Largest foreign creditors are a bunch of 100 to 1 levered hedge funds in the basis trade that has absorbed nearly half of US debt in the last 3 years. With SOFR spreads blowing out recently, this basis trade bomb could detonate again sending shockwaves through the market. Undercounted Cayman Islands exposure to US treasuries by $1.4 trillion, a country with a GDP of only $7-$8 billion dollars a year. Gross short of futures is $1.2 trillion dollars. [shit hitting the fan](https://youtu.be/SqltKQcQu1k?si=Fx_ujGH73JAvrH70)
Now is your time to scoop em up. Mag7 and big 2 crypto. Volatility is signaling this is over, as is credit spreads, SOFR, and SRF.
Two theories: 1: Two regional banks with loan losses because some schmucks wouldn't pay their bills. 2: The SOFR rate went from 4.19% to 4.29% and that spooked some people.
Demand. SOFR is still a market-set rate. It is generally not supposed to go above IORB for long, because when it does banks can arbitrage them back to parity, so IORB is considered a ceiling. SOFR spikes above IORB when there is high demand for cash or collateral. SOFR has been going above IORB at quarter ends for "window-dressing"---essentially everyone trying to get a good balance sheet snapshot for their 10-Qs. The spike in mid-Sept was to pay corporate taxes. But now? There is no obvious innocuous explanation, so it's probably related to regional banks and private credit: JEF, FITB, ZION, WAL, OWL, KKR, BX, etc.
Not saying the OP's reason should be given any weight, but be \*very\* cautious here. SOFR is spiking above IORB without the typical quarter-end/taxes excuse. There is already known junk collateral in private credit and that's probably just the tip of the iceberg. The yield curve inversion -> bullish steepening, corroborated with IR swaps, SOFR futures, and the recent repo fails have been signaling things could go illiquid soon.
Interest in December SOFR call options is exploding: https://preview.redd.it/fgj03l5mkkvf1.png?width=859&format=png&auto=webp&s=01347d7e1b571524b9b4504e5703b98381c106f9
That took longer than I expected to come out. There's stress in the system and liquidity is drying up. Two clues - 1. Someone is drawing $8.35bn on Federal Reserve Standing Repo facility - also known as the SRF (something we haven't seen since the pandemic). 2. The SOFR/Discount window spread just went positive by 4bp (it's normally at about -15bp to -20bp) There have been cracks appearing for the last few weeks. Could be we're about to see the next set of bank failures. Watch QE spin up rapidly and I wouldn't be surprised if we see BTFP v2.0
Because the SOFR is blowing out past the FedFunds rate.
Your forgot to mention $1.5 billion in zero-interest debt expiring 2026. They don't have the cash to repay and guess what? New debt is not zero-interest anymore and interest on $1.5 billion takes a significant stake on their earnings. Also literally 99% of their customers leave before earning them anything - they have 500 enterprise customers (they call them "Scalers+") versus 500,000 poor Indian dudes running VMs ("Learners" and "Builders") who leave before earning them a buck (their Net Dollar Retention Rate is < 100%). They have no moat against AWS or other cloud giants, historically they sold a VM / VPS called Droplet and didn't offer much else, they are only now starting to offer one or two managed services, as their customer's products grow they are forced to leave to more complete offerings like AWS. Don't get me wrong, I'm a happy customer for over 10 years and entered at $28, but at $40 I don't think there is enough moat to compensate the risk. The time to buy was the dip to $25. Their last issuance to repay expiring debt was $800M at SOFR+1.75%, ~6.1% at time of issuing which gives $91.5M a year in interest. At their guidance back then of 1.95 EPS x 95.29M shares = $185.8M in earnings, minus $91.5M interest = $94.815M / 95.29M shares = EPS 0.995, so roughly the share price is the PE you pay. The sector PE is currently 34, last 10y it's 23, and last 20 years it's 18. At $40 you're paying a high price for maybe some short-term AI earnings (even that is not a guarantee as there's lot of competition) and dubious long term prospect.
Late to the party but I have a strategy that would work pretty dang well for your scenario. You wouldn't need to sell and take capital gains, you could just pull liquidity from your account, similar to an SBLOC. But better lol I’m going to keep this surface level: It’s particularly well known that individuals with brokerage accounts can use those assets as collateral and borrow against it. However, if you look on Schwab/Fidelity/BoA/etc. it isn’t worth it in many situations because of the rate alone. What many don’t know is that if you (or someone with experience in this) executes a derivative box strategy within that account, it’s essentially creating a synthetic, risk-free loan because it has a defined outcome. You can, therefore, access your capital at the SOFR rate while allowing your money to continue growing in the brokerage account. Where this would be extremely relevant with your situation is this loan creates capital losses through the interest payments so whenever you DO decide to sell you could potentially eliminate capital gains entirely. At the same time, you can pull liquidity now, finance your house, and let your investments continue to grow. I could run the numbers for you and throw them into a spreadsheet if you’d be interested.
Nothing has really changed with the exception of people piling into stocks as well as rocks. If anything, liquidity is getting much worse as we've come close to 2 SOFR / Repo crises just in the last week, and tariff inflation has only just begun to show up in ISM PMI. Beyond that, we also have the UK, France, and Japanese bond markets going bonkers as politicians refuse to address inequality which will only exacerbate the trends. At some point we'll need to start taxing wealth instead of work if we want a society, but if that doesn't happen then we're heading for some major global financial calamities.
Wait until you learn about the interest rates that the wealthy are charged for loans, sometimes even under SOFR. You can save a lot of money by being wealthy. Conversely, it is really expensive being poor -- so don't be poor. A lot of people make that mistake.
Details of the Revolver are as follows: A floating annual interest rate on amounts drawn equal to SOFR¹ plus 6% (subject to a 4% SOFR floor). No required amortization payments over the course of the Revolver. Matures on September 29, 2028, allowing for repayment at any time in US $2,500,000 increments, subject to an interest-only make-whole if repaid before the six-month anniversary of funding. The proportionate release of certain real estate upon request and so long as the outstanding principal balance under the Revolver does not exceed 60% of the appraised value of the remaining pledged real estate. “Chicago Atlantic is proud to support Verano with this flexible financing solution which reflects Verano’s strength across its markets,” noted Peter Sack, Managing Partner of Chicago Atlantic. “Revolving credit facilities are common financial solutions outside of the cannabis industry, and Verano’s revolver is what we believe to be the largest such facility among US operators in the history of the industry, granting the Company the dynamic ability to deploy and reduce higher-cost leverage as needed.”
Thoughts on VRNOF $75 mil credit facility? Looks like they are getting SOFR + 6%...Using it to pay off some senior secured debt. New debt expiry Sept 2028.
SOFR so good, soon as tomorrow we could be SOF’ked
If SOFR rate comes in at 4.65 you could buy puts on anything market will be in shambles
Expecting end of quarter SOFR rate jump to 4.65% tomorrow few gamble lottos puts in place, will add continuation if it hits best setup we’ve had for a SOFR spike in 6 years
Avoid syndications. They are high risk and though they CAN return big, they often return zero ( i.e. - your principle is gone ). I fundamentally don't understand why people are so down on margin. The primary risks with buying on margin are: 1. Sequence risk ( i.e. you invest on margin at the top of the market ) 2. Margin calls in a black swan event 3. Dramatic increases in SOFR resulting in a higher margin interest rate The first risk can be addressed through dollar cost averaging. If you are investing on margin, don't do it all at once. Increase your margin % over time so you don't end up buying at the top. The second risk can be mitigated by keeping the the volatility of the portfolio under control through diversification. Adding TIPS, gold, international AA corporate bond funds and international stocks to the portfolio goes a long way. So does keeping 10% of the portfolio in money market funds. It would take a significant black swan event ( bigger than 1987's black Friday, bigger than 911, bigger than the 2008 financial crisis ) to crater a well diversified portfolio to the point where you get a margin call. Basically, if that happens, then we all have much bigger problems to worry about. To address the final risk, simply keep an eye on inflation and de-leverage if it starts to creep up. Margin rates are usually pegged to SOFR and the Fed is pretty good about communicating what it is going to do next. The only way margin rates go up significantly is if there is a ton of inflation that causes the Fed to get hawkish. You can see that coming and deleverage before it gets bad. I look at it like this: If I buy a house with 5% cash down and a 95% loan, then rent it out to tenants I've bought that house on margin. That transaction is susceptible to sequence risk ( I might have bought at the top of the housing market ) and black swan events ( war, floods, storms, asteroid impacts ). But it is generally considered to be a safe investment. This is despite the fact that real estate has high transaction costs, is generally illiquid and there is significant risk that your tenant doesn't perform for you financially. Plus, you have maintenance costs, taxes and other expenses that drag on the investment. Why wouldn't stocks be the same? The only additional risk is that you're borrowing short term and, with the Fed looking to cut rates over the next several years, that is more likely to work FOR you than AGAINST you. You are buying an asset that has an underlying value and, historically, has earned around 10% annually on average. Borrowing at 5% do to that just makes sense. So my advice is this. If you want to improve your returns over a **long period of time**, then using margin and dollar cost averaging to expand a **well diversified portfolio** makes sense and can create outsized returns. This is even more true if you can borrow the money at a low, fixed rate over a long time period ( i.e. like taking a 30 year second mortgage at 2.5% in the middle of the pandemic, then dumping the funds into SPY. ) If you want to use it to gamble on high risk, potentially high return bets........that is not a good idea. Wall St. is the house and the house always wins. Hell, they lost their asses in 2008 and the STILL won when the rest of us bailed them out. Don't borrow a stake to play poker against professionals.
2019 repocalyspe is possible sept 30th, best setup we’ve seen in 6 years nothing ever happens right? Wouldn’t bet on it, but play continuation downwards if SOFR rate does spike and spread starts thinning, know what you’re buying and holding in that case
Bank reserves dipping under $3T with sustained downward pressure expected could this lead to a SOFR rate spike? SOFR-IOR spread heightens and we really could have a liquidity event looming spooky season is here
^this Also, the forward will be at a marginally higher rate than USTs. It’s going to SOFR+spread where this spread is some nebulous cost of balance sheet for people who are holding reverse conversions on this ETF. Sometimes this cost can be pretty high, like 1%.
I remember in 2021 when we had to do the transfers from Libor to SOFR lol what a mess, I had to do so many check sheets
I have an ARM that was pegged to Libor and is now SOFR.
The market obsesses over SOFR because the Fed controls it, and its moves signal near-term policy and liquidity
SBLOC rates are also based on SOFR. E.g. [Fidelity's rates](https://www.fidelity.com/lending/securities-backed-line-of-credit) are 2.35% + SOFR for $1M to $3M
SOFR is our approximation of the "risk-free rate," which underpins all other rates in the economy. The 10 year can be thought of as SOFR plus a term premium, corporate bonds can be thought of as SOFR plus a default premium, equities can be thought of as SOFR plus a market premium, etc. It's an important rate itself, but the main reason is that it reflects changes that affect everything.
The 10yr yield is driven by the SOFR
because loans used to be tagged against LIBOR, and once LIBOR was discontinue, SOFR became the successor.
Most lines of credit run on SOFR plus a spread and that is a lot of how investment into non speculative growth opportunities happens.
That was a low inflation environment though. Dropping SOFR when there's currently inflation... oof.
That's not true. When the US cut rates in 2020, SOFR dropped from around 2% to almost 0%. When the Fed began hiking rates to cool inflation, SOFR jumped to 5.3% and has since come down to 4.3%. In the meanwhile, yields on 10 year treasuries followed the same trajectory. They dropped when rates were cut in 2020, rose when rate hikes started, and have been been falling back from its Oct 2023 peak of \~4.9% to 4.1%. Yes, recession fears might keep long-term rates from dropping as much as short-term rates. This is good for some entities (like mREITs) who profit from the spread, and in general large institutions have tools like credit swaps to help them arbitrage some of the short-term/long-term spread. Mortgage banks also have MBSs (if MBS buyers are willing to accept tighter spreads to short-term treasuries), in which case they can afford to finance mortgages from short-term debt since they'll be selling that debt as MBSs. TLDR: SOFR dropping is a big deal. It will lead to drops in longer term treasuries in the long run, but it might be bumpier.
I work in corporate banking in Europe. Not sure how it works in the US but every USD loan I’ve ever looked at here is indexed at SOFR
Sure for investment grade and mortgages the 10y is important. Junk rubs on FRNs which SOFR is a major component of.
How important is SOFR to companies companies to the 10Y? Because 10Y is going up.
More likely the lenders have a set point risk profile and they'll just increase the fixed portion of new loans by whatever the rate cut is.... SOFR+ 8.25%
Data center debt in special purpose entities has partial floating rate = SOFR (Fed rate) + 8%, so 25bps cut is good for developers and not so good for lenders. But on a trillion of projected debt, that's $ 2.5 billion...real money.
SOFR (secured overnight financing rate) taking off 👀
Holy fuck, SOFR is at 4.51... Above the discount rate...
> With a margin loans of less than 100k you would be paying SOFR+1.5%, which is pretty low. Nobody would give out a loan for less than SOFR, so when account for equity costs, profit margin and product costs, the lowest he would pay would be SOFR + a few bps. The comparison's irrelevant when you're talking <$100K vs $1B. That's just selective use of data. If we both took out $250K, $500K $1MM, or $10MM, I guarantee Elon would get a better interest rate.
With a margin loans of less than 100k you would be paying SOFR+1.5%, which is pretty low. Nobody would give out a loan for less than SOFR, so when account for equity costs, profit margin and product costs, the lowest he would pay would be SOFR + a few bps. The second point is definitely fair tho, it’s much easier for them to get tons of cash with a secured loan than it is for us plebians
I doubt his margin loans are that much cheaper than yours, IBKRs lowest tier is benchmark (presumably SOFR?) + 1.5%. I would assume he would get around SOFR + 25 to 50 bps on secured loans.
>Bloomberg's got a pretty interesting writeup on a potential repeat of 2019's LIBOR/SOFR rate spike right before the Fed rate cut decision. u/moorhound 2019 repo fiasco was interesting. Part of the problem was fear among well even among well capitalized banks JPM with zero issues not wanting to step in and lend at extremely lucrative rates. People were scared about what could happen in a post QE / QT world. That really isn't as big a thing now. We also now have the standing repo facility established due to the spike, which can quickly inject liquidity. Banks can bring high quality collateral like treasuries and borrow from the Fed (technically sell bonds to the Fed for cash and buy them back a bit higher but effectively it is a collateralized loan). Additionally, several months leading up to repocaplyse 2019, excess reserves at the Fed were draining rapidly: https://fred.stlouisfed.org/graph/fredgraph.png?g=1MaEC&height=490 Since we have dramatically slowed down QT and close to halted Treasury QT, reserves have in a steady state if not actually trending upwards: https://fred.stlouisfed.org/graph/fredgraph.png?g=1MaEF&height=490 I hate to sound like an arrogant bull on repeat... but this time is different!
Either way, number game won't be boring next week. Bloomberg's got a [pretty interesting writeup](https://www.bloomberg.com/news/newsletters/2025-09-08/there-are-whispers-of-another-repocalypse) on the potential for a repeat of 2019's LIBOR/SOFR rate spike right before the Fed rate cut decision.
SOFR @ 4.42%. Elevated for a week now. Funding markets stressed. They'll lower rates *and* have to stop QT if it doesn't chill out, and bank reserves dip below $3T.
SOFR+2.75 is still really good. Remember these lines are interest only so there's no principal payment. As your portfolio gets higher and higher you get better and better rates. All the big banks do this - Schwab, JPM, BOA, UBS, USB etc... They will open a brokerage account and then lend against it.
Just curious where you find these loans. I'm looking at SOFR + 2.75% with Fidelity at > 500K loan. I'd love to get that interest down to a 30 year treasury rate.
Somebody at the WH has a number....a number reflecting the increase in GDP if overnight Fed SOFR rates are decreased by as little as a quarter point, 25 bps. The number is uge. Uge.
SOFR 4.39% again. Funding markets are getting a little crunchy with Bessent sucking up all the liquidity for the TGA refill.