While, everyone was paying attention to the budget vote -- this happened. The Secured Overnight Funds Rate (SOFR) plunged. In matters financial, the SOFR is the world's most important number.
On November 6, 2025 the SOFR crashed to 3.92% -- the lowest level in two years. It is the benchmark that controls $397 trillion in global contracts, and it just signaled something catastrophic.
This is not a rate cut. This is a liquidity flood. The rate dropping like this is designed to make it super cheap for Banks and Corporations to borrow funds overnight to balance their books.
The SOFR is the number that moves everything.
SOFR replaced LIBOR (London Interbank Overnight Rate) in 2023 as the foundation beneath derivatives, corporate loans, adjustable mortgages, and securities worth more than 15 times global GDP. When SOFR moves, $397 trillion in financial contracts reprice simultaneously.
It just fell from 4.22% on October 31 to 3.92% in six days. A 30 basis point nosedive that saves borrowers $50 billion annually but screams one word: panic!!
WHAT THE FED IS NOT SAYING:
The Federal Reserve cut rates 150 basis points year to date. Excess reserves are flooding repo markets. Overnight borrowing costs for the entire financial system collapsed to levels not seen since September 2023, when recession fears first surfaced.
Translation: The Fed sees something breaking and is throwing liquidity at it before the fractures become visible.
THE MECHANISM OF CONTAGION:
Lower SOFR slashes bank funding costs by 10 to 30 basis points immediately. Corporate loan rates drop 15 basis points. Adjustable rate mortgages reset 20 basis points lower, cutting monthly payments by $200 average.
Credit expands 2 to 5 percent. Lending accelerates. Asset prices inflate.
But here is what they are not telling you: sub-4% SOFR has preceded every major asset bubble collapse since 2008. Cheap money does not fix broken growth. It masks it.
THE GLOBAL SPILLOVER:
Cheaper dollar funding triggers $10 billion plus in emerging market carry trade inflows. Currency volatility spikes. Foreign central banks hoard dollars. The cycle that destroyed Argentina, Turkey, and Sri Lanka restarts.
WHAT HAPPENS NEXT:
If Q4 GDP misses expectations or inflation spikes above 3.5%, SOFR reverses violently. Repo market seizures return. The 2019 overnight funding crisis replays at scale.
If the Fed holds course, credit bubbles inflate until something pops. Corporate debt. Commercial real estate. Equity multiples at 25x earnings.
THE TRUTH BURIED IN THE DATA:
SOFR is not just a rate. It is the early warning system for systemic stress. When the world’s most important number collapses this fast, it means central banks are terrified.
They are easing into a recession they cannot admit is coming because this time, the very real risk is that it goes from Recession to Depression to the Great Unwinding.
They know they can't give American that $2,000 "Tariff Dividend" because the US Supreme Court seems poised to declare those Tariffs illegal, and they would have to refund all that money.
Of late, they NEED to be able to pour liquidity into the system because Banks are already tapping into the Overnight Repo Facility (SORF) to get cash.
When this happened in 2019, COVID made it possible to give taxpayers $1200 COVID Stimulus money and a couple economic Stimulus checks after that, to put $2.5 TRILLION into the system. There's no COVID this time. So they thought they could use a "Tariff Dividend" but that seems to be in existential jeopardy from the Supreme Court. So they're trapped. How to they get a couple TRILLION more out into the economy before it seizes-up and collapses?
This. Plunge the Overnight Borrowing Rate.
Watch overnight repo volumes like a seismograph.
The tremors started. The quake is next.
