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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FED
Latest data shows that the Treasury General Account declined in each of the 4 working days to Jul 8 by a cumulative $125B, but the current cash balance of $725B is higher than many analysts appear to have expected at this point. Consensus has largely been that the TGA would adhere to the Treasury's own assumption (made in May) of winding down to $450B by the end of July, in preparation for the debt ceiling deadline.
- To be sure, there has been a massive amount of reduction vs the peak of $1.83trn, but with 16 more working days until the deadline, meeting the $450B target would require a $275B drawdown, or just over $17B per day (a significant acceleration compared to the past 15 days which have seen an average daily decline of $2.6B).
- Our policy team cites an ex-Fed economist who expects Treasury to keep a cash balance closer to $600B at end-July, with treasury bill paydowns continuing at a slower pace despite the elevated TGA volumes.
- If the TGA doesn't shrink as quickly as many anticipate, the level of reserves in the banking system may prove slightly lower than forecast by analysts, and thus takeup of the overnight repo facility and downward pressure on funding rates could be somewhat lessened vs baseline.
Liabilities Reserves US Treasury General Account Reverse Repo (Foreign) Reverse Repo (Dealers) Currency In Circulation Other* Last Week's Net Change (USDbn) 344.6 7.4 -5.4 282.8 6.3 6.3 4-Week Net Change (USD bn) -60.5 23.1 45.6 -206.2 6.8 -152.3 Total Holdings (USD bn) 3856.2 753.4 263.6 785.7 2186.9 301.3
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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