US Fed Adds $74.6B Liquidity in New Year Market Operations

The Federal Reserve added $74.6 billion in liquidity to financial markets through its Standing Repo Facility on December 31, 2025. This borrowing, the highest ever for the program, reflects heightened year-end liquidity demands.

Banks and other eligible institutions borrowed the funds using $31.5 billion in Treasury bonds and $43.1 billion in mortgage-backed securities as collateral according to reports. This exceeded the previous record of $50.35 billion in borrowing set on October 31, 2025.

The New York Fed has encouraged greater participation in the Standing Repo Facility after banks initially showed reluctance to use the tool as data shows. The central bank removed daily borrowing limits in November to support market stability.

Why Did This Happen?

Year-end often brings liquidity pressures as institutions adjust their balance sheets. The final trading day of 2025 saw heightened demand as financial firms managed cash needs.

The New York Fed has taken steps to ease these pressures, including removing a $500 billion daily limit on the repo tool. This move aimed to encourage banks to access liquidity when it made economic sense.

How Did Markets React?

Markets appeared to anticipate the liquidity surge, with most expecting the borrowing to dissipate as normal trading conditions resumed. The New York Fed will continue operations to absorb or provide cash through its reverse repo facility according to reports.

The increase in liquidity is part of broader efforts to manage market functioning. The Fed also began buying short-dated government bonds in December to support its monetary policy framework as per data.

What Are Analysts Watching Next?

Goldman Sachs expects the S&P 500 to rise by 11% in 2026, projecting a year-end level of 7600. The firm forecasts U.S. GDP growth to average 2.6% in 2026, supported by tariff relief, stimulus, and AI-driven productivity improvements.

Analysts are also watching key market events in early 2026. These include inflation data, manufacturing and retail sales, and Fed speakers like Tom Barkin and Michelle Bowman according to market analysis.

The Federal Reserve will release minutes from its December FOMC meeting on January 1, 2026. These minutes will offer insights into the central bank's discussions on future policy moves as reported.

Initial jobless claims for the week ending January 3 and the December employment report on January 9 will also be closely watched. These reports will help shape market expectations for potential rate cuts and economic activity according to analysts.

Arbor Realty Trust announced preferred stock dividends on December 29, 2025. The company declared cash dividends on its Series D, E, and F cumulative redeemable preferred stock for the period from October 30, 2025, through January 29, 2026 according to official statements.

Public Service Enterprise Group (PEG) highlighted its regulated utility operations as a stable profit source. The company emphasized investments in energy reliability and clean energy infrastructure to meet state targets.

DOMS Industries extended the deadline for acquiring the remaining 6.5% stake in Pioneer Stationery to March 31, 2026. The original deadline had been set for December 31, 2025.