Higher FRA-OIS which is the forward rate agreement - overnight index swap (FRA rate banks demand) OIS (overnight risk free rate) is a proxy for borrowing costs. When risk premiums or the market demand for a higher risk premium rises the spread widens. The funds current path is creating conditions in which that premium is elevated, and this is ensuring a tighter stance then might be necessary. Reserves are draining fast, and at the same time foreign entities are still seeing the current repo rate 430bps as more attractive than many treasury yields. Now based on the chart below, what we could see is the Fed starting to create a issue for liquidity within the market, thus they would either need to cut or start QE to ease liquidity conditions. Happy holidays everyone.