Eurodollar University Repo Market Stress Is Back (And Bigger Than You Think)
Feb 22, 2026
A deep dive into a sudden $30 billion spike in borrowing at the Fed's repo facility and what it reveals about market strain. Discussion of dealers hoarding Treasuries as defensive collateral and how that feeds cash tightness. Connections drawn between private credit stress, recent asset sales, and rising risks in the monetary plumbing.
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Dealers Piled Into Treasuries Ahead Of Trouble
- Primary dealers massively increased Treasury holdings as a defensive response to anticipated collateral and cash stress.
- Dealer coupon inventories rose ~28% since early December, signaling they expect tighter collateral flow and monetary disruption ahead.
Blue Owl Shows Stage Two Private Credit Dynamics
- Blue Owl's forced asset sales provided the first concrete example of 'stage two' behavior in private credit funds.
- Stage two means outflows no longer balanced by investor inflows or bank financing, prompting fire sales and gating.
Hold High-Quality Collateral Before Markets Tighten
- Prepare for constrained collateral by holding high-quality assets rather than relying on market access during stress.
- Dealers load coupons to avoid dependence on tight rental markets and to charge higher repo rents when scarcity hits.