A flood of market liquidity has pressured repurchase agreement rates, prompting some investors to pivot away from traditional forms of cash management.

Market participants have been hesitant to accept SOFR as the successor to Libor, but uniting around a single reference rate is increasingly important to keep benchmark markets from becoming fragmented.

As regulators push to transition away from Libor, sales of Treasuries linked to the successor rate could boost the new benchmark’s credibility and expand nascent markets for related debt and derivatives.

Cash and cash equivalent investors face challenges balancing liquidity and returns amid near-zero short-term rates.

The expiration of the temporary SLR changes should enhance the soundness of the banking system, but likely at the cost of Treasury market liquidity.