An independent publication
Vol. I, No. 13 Afternoon Edition
A civic journal of money and credit
Live Federal Reserve rates, FOMC decisions, speeches, and Treasury data, with every figure copied from the agency that published it.
Published · Updated
SOFR, the Secured Overnight Financing Rate, is the overnight cost of borrowing cash when Treasury securities are pledged as collateral, published each business day by the New York Fed.
SOFR is built from actual transactions in the market for overnight repurchase agreements, called repos. In a repo one party borrows cash and hands over Treasury securities as collateral, then buys the securities back the next day at a slightly higher price. SOFR summarizes the rate on those trades. The New York Fed publishes it in the morning for the previous business day.
The fed funds rate covers unsecured loans between banks. SOFR covers loans backed by Treasury collateral and includes a wider group of lenders and borrowers. The two usually sit close together because both are overnight rates tied to the Fed's policy range, but they measure different markets and can part ways when funding conditions change.
SOFR replaced LIBOR as the main benchmark for many adjustable-rate loans, bonds and derivatives in the United States. Because it is based on real trades and not on bank estimates, it is harder to manipulate. The New York Fed also publishes SOFR averages and an index so contracts can use a rate measured over a longer period.
This paper prints the stored values as published and does not average them itself.
Stored as the agency published it. This paper does not forecast or compute a change here.
The Federal Reserve Bank of New York publishes SOFR each business day, along with its averages and index.
No. SOFR is a secured rate based on Treasury repo trades. The federal funds rate is an unsecured rate on overnight loans between banks.
In the United States, SOFR is the benchmark the official committee of market participants recommended to replace U.S. dollar LIBOR.