Goldman Sachs Group Inc. has indicated that there is expected to be a significant increase in overnight lending rates in US money markets this week. This is a common occurrence at the end of the month.

The surge in rates is attributed to a large number of Treasury auction settlements scheduled for Thursday, which will result in a substantial amount of cash being withdrawn from banks. As Wall Street banks prepare for the influx of new Treasuries, they are also working to strengthen their capital holdings to meet regulatory requirements. This dual pressure is expected to limit the amount of cash available for lending through overnight repurchase agreements, potentially causing a brief but sharp increase in lending rates.