September 30, 2015 / 3:32 PM / 4 years ago

MONEY MARKET-U.S. repo rate jumps to highest in 3 months

* U.S. Fed awards $150 bln in 2-day reverse repos

* U.S. T-bill rates into year-end stay negative

By Richard Leong

NEW YORK, Sept 30 (Reuters) - A key borrowing cost for Wall Street dealers jumped on Wednesday to its highest level in three months as cash investors reduced their lending at the end of the quarter.

The overnight rate on repurchase agreements was last quoted at 0.30 percent to 0.40 percent after rising as high as 0.45 percent earlier, ICAP data showed. These were the highest levels since the end of the second quarter.

The overnight repo rate ended at 0.15 percent on Tuesday.

In the $5 trillion repo market, Wall Street dealers borrow from money market funds and other investors with Treasuries and other securities as collateral to fund their trades.

At quarter-end, investors tend to scale back their repo exposure to conserve cash. Instead of repos, they put money into near risk-free Treasury bills, and fixed-rate reverse repurchase agreements offered by the Federal Reserve.

On Wednesday, the Fed awarded $150 billion of two-day fixed-rate reverse repos to 70 bidders at an interest rate of 0.07 percent after it allotted $100 billion in seven-day reverse RRPs last week.

Interest rates on a number of T-bill issues were stuck in negative territory on the open market, suggesting investors were willing to pay a premium to own these securities.

Interest rates on T-bills that will mature on Thursday through year-end were quoted at -0.0050 percent to -0.375 percent, Tradeweb data showed. (Reporting by Richard Leong; Editing by Chris Reese)

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