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Ok_Paramedic5096 t1_j2cch0c wrote

Can one of you helpful mother pleasers please explain to me why the fed funds rate is 4.25% but a 1-month treasury sells for 3.875%.

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DaddyDersch OP t1_j2cdhfc wrote

Thats above my pay grade 🤣 but interested to hear what someone has to say

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Nolimon1 t1_j2cgckl wrote

Technically I’m seeing Fed funds rate of 4.33 today, but close enough… Fed funds rate is a volume weighted median of all treasuries sold and reported in some specific report (not quite sure if it is indeed all sells or just a sample). So it includes longer term securities like 3 month, 6 month, 12 month that have higher yields than the one month

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Ok_Paramedic5096 t1_j2ch1ui wrote

Fed funds rate affects what the immediate rate a bank offers loans at as well a the rate they set for their over night reverse repot operations. My point still stands, why is their reverse repo market paying out at 4.25% and treasury security auctions for 1MO securities coming in at 3.875%

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