Some questions about interest rates: 1. Today (7/15/25) EFFR is 4.33, while SOFR is 4.37. If the S in SOFR stands for secured, why is the rate higher? Shouldn't it represent less risk, and thus a lower rate? 2. IORB is currently at 4.40. Why would a bank not get this higher rate on reserve balances, and instead get the lower SOFR rate of 4.37? 3. The US treasury sells notes, bills and bonds to finance the government, but how does it know how much of each to sell? When interest rates went to nearly 0 in 2020, why didn't the Treasury borrow an enormous amount of long term debt? 4. The Fed also has info on it's balance sheet, and has been slowly reducing it's holdings across asset classes, to the point where it's about the same as in March 2020. Wouldn't this make interest rates go up, if the Fed is selling its treasuries?
sofr is private hence some credit risks. on fed, more complex than you wrote. but all the excess is from congress debt limit and spendings, treasury sells the paper, not fed. fed is only a fiscal agent to keep market opening and keep an eye on the liquidity.
The Fed is rolling off its Treasury holdings, IOW not replacing them with new issues. Anyhow rates (long rates) have been going up, ironically since they started lowering last year.