Funding Markets Show Dash for Cash as Firms Build Buffers

Recent activity in funding markets shows a quiet push by financial institutions to build up buffers that would help protect against any credit meltdowns or market distress, a sign they perceive rising risks even as overall conditions remain stable for now.

A cluster of indicators — from increases Federal Home Loan Bank lending to shifts in money‑market fund allocations — all suggest that institutions, at the margins, are positioning themselves more defensively and are in some cases paying up to do so. Apollo Global Management Inc., through its insurance arm Athene, was the second‑largest borrower in the entire FHLB system last year, a sign private‑credit platforms are part of this move.