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SOFR and overnight funding rate markets

Most rate markets focus on the Federal Reserve's policy decision. A quieter group of contracts asks about overnight funding rates themselves: will SOFR print above a level on a given day, or will the effective fed funds rate move within the target range? These rates are published daily by the New York Fed and react to plumbing details that rarely make headlines. This SoftCta guide explains the mechanics so prices make sense.

How SOFR is built

SOFR is calculated from transactions in the Treasury repurchase agreement market, including tri-party repo and cleared bilateral repo. The New York Fed publishes a volume-weighted median rate, along with the first, 25th, 75th and 99th percentiles and the underlying volume. A contract might reference the headline rate or one of those percentiles, so read which figure is named.

Publication timing

The rate for a business day is published the next business day around 8:00am Eastern time. Weekends and US holidays have no SOFR of their own. Our time zone and as-of guide explains why a contract titled for a Friday will often settle on Monday morning. The New York Fed can also correct a published rate within a short window if an error is found.

Effective fed funds rate

The effective federal funds rate, or EFFR, is a volume-weighted median of unsecured overnight federal funds trades, also published by the New York Fed. It usually sits a few basis points inside the target range because of the interest rate the Fed pays on reserves and its overnight reverse repo facility. Contracts sometimes ask whether EFFR will move by a basis point or two between meetings, which is mostly a question about reserve levels.

Month-end and quarter-end pressure

Repo rates often rise around month-end and especially quarter-end, when banks shrink balance sheets for reporting and Treasury settlements drain cash. Tax dates and large Treasury auctions also matter. A SOFR spike on those days can be predictable, which is why a price near certainty for a quarter-end print above a level may be reasonable.

Balance sheet and reserves

As the Fed shrinks its balance sheet, reserves fall and repo markets can tighten. Our balance sheet guide covers the link. Readers watching SOFR versus the interest on reserve balances rate often read it as a signal of how scarce reserves are becoming.

Daily rate versus policy path

A daily SOFR contract differs from a fed decision market and from fed funds futures, which average rates over a month. A single day can spike while the monthly average barely moves. Keep the settlement period straight before comparing prices across products.

Primary sources SoftCta readers open

• The New York Fed reference rates pages for SOFR and EFFR, including percentiles and volumes.
• The Federal Reserve's implementation notes after each policy meeting.
• The New York Fed's published policy on rate corrections and republication.

Reading the quote step by step

• Read the full title and rules, including the named settlement source and the time zone.
• Convert the Yes and No prices to implied probabilities and note the gap between them.
• Subtract fees and spread to see the effective price you would actually face.
• Write your own probability range and the evidence behind it, then compare.
• Check related and near-duplicate markets on other venues for consistency.

Closing SoftCta checklist

• Re-read the venue definition in your own words before reacting to a price.
• Convert prices with fee and spread awareness; verify live cents on the operator.
• Prefer primary settlement sources over secondary headlines and social summaries.
• Treat ChanceWire hubs, movers, and tools as orientation — not order entry.
• Confirm age, location, and product eligibility; SoftCta pages will not suggest location spoofing.
• If clarity is incomplete, watching is a complete SoftCta outcome — no pick-selling urgency required.

SoftCta habits

• Write your own probability range before checking the crowd price.
• Prefer dated primary sources over social summaries.
• Compare related markets when a single book looks extreme.
• Size curiosity with fees and depth in mind; substantial risk of loss.