U.S. Treasury and financial markets face liquidity and oracle risks

U.S. Treasury officials and market participants recently discussed the possibility of the Treasury lending excess cash from the Treasury General Account (TGA) into the overnight repo market. While no specific program, amount, or timetable was announced, the move could potentially increase bank reserves. The economic impact would depend on the relationship between the repo rate earned by the Treasury and the interest rates paid by the Federal Reserve on those reserves.

In the digital asset sector, oracle provider Pragma has identified six of its 22 mainnet feeds as being at critical risk. This assessment follows a $3.5 million borrowing exploit at the Nostra lending protocol on Starknet, where a manipulated oracle price allowed for unauthorized borrowing. Pragma warned that quoted token prices do not guarantee liquidity, noting that sell-quote deterioration for certain tokens reached between 15% and 22% when attempting to liquidate larger positions.

Separately, new Federal Reserve data via the Financial Vulnerability Index highlights structural weaknesses in the financial system. While Bitcoin has seen recent price rallies driven by spot demand, the Fed’s index shows elevated financial leverage and notable funding risks, suggesting that underlying vulnerabilities could amplify future market shocks.