It may continue to be a good idea to monitor the repo market for hints of distress or Fed tapering. A great way for the retail investor to monitor the repo market is by creating a synthetic repo position using futures contracts on the 10-year US Treasury Note. This position is also known as a “calendar spread.” Buying a 10-year note now and selling a 10-year note at a later date is similar to a repo position. In the repo market you use “high quality collateral” to borrow short-term. Until this loan is paid back, there is an interest rate the lender charges for the wait. This rate is the repo rate.

high-quality collateral