1.   One possible answer is that the Fed is wrong, that depository institutions do borrow for profit as well as need.

2.   Higher interest rates weigh on bonds by making it more expensive for financial institutions to borrow funds in the money market and invest in bonds.

3.   Higher interest rates make it more expensive for financial institutions to borrow money, which can reduce their earnings.

4.   Higher interest rates make it more expensive for financial institutions to borrow money, which can reduce their profitability.

5.   So, only top quality institutions can borrow abroad.

6.   In March, it lowered key rates to zero and flooded the market with money to make it easier for financial institutions to borrow.