Market Prep: Repo Markets Explained & SNOW, CRM Earnings

$SNOW $CRM

Hello Traders,

Today, we’re going to deep-dive into the Repo Market and what it means for the next FOMC meeting. We’re going to look at option analysis for CRM and SNOW earnings and look at levels for SPX.

Let’s begin!

What’s Happening in the Repo Market

The repo market (repurchase market) is a short-term funding market where banks, hedge funds, and large institutions borrow cash overnight using Treasuries or other high-quality assets as collateral. It acts as the plumbing of the financial system: when liquidity is tight, repo usage spikes; when liquidity is abundant, repo demand collapses.

Under normal conditions, the repo market is quiet and stable. But when stress builds up — from funding shortages, collateral mismatches, or big unwinds (like carry trades or hedge-fund deleveraging) — the system starts to “ping” the Fed by tapping repo operations for emergency liquidity.

Repo Operations (Source New York FED)

The chart displays the amount of repo liquidity accepted by the Fed over the past 3 months. A few things stand out:

1. Repo usage has picked up sharply since late October.

We see multiple spikes, including a massive jump around early November, with usage jumping above $40B in a single day. That’s a clear sign that large institutions needed cash fast.

2. Stress reappeared at the end of November and early December.

The most recent bars show another wave of elevated demand, with several days between $10B–25B. That tells us funding pressure has not fully eased.

What This Repo Stress Means for the Fed Going Into the December FOMC