Definition
The benchmark rate for overnight loans collateralized by US Treasuries. Replaced LIBOR as the primary USD reference rate.
SOFR is based on actual transactions in the Treasury repo market, making it more robust than the survey-based LIBOR. It reflects the cost of overnight secured borrowing and is published daily by the NY Fed. When SOFR spikes above the IORB rate, it signals funding stress in the repo market — a potential early warning of liquidity problems.