Borrow Stress Builds Gradually, Unwinds Suddenly
The stress associated with borrowing rarely occurs as a single event. It accumulates as a result of small, often imperceptible changes: gradual rate increases, reduced flexibility, tighter conditions, slower response times to requests.
At this stage, positions remain unchanged. Nothing seems to be disrupted. Then, as soon as the threshold is exceeded, a rapid adjustment occurs. Rates jump, supply disappears, and positions change dramatically.
The apparent suddenness of these changes reflects a delay in reaction rather than a sudden cause.
