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Needle Still Points South

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Yields Bounce as Equities Make New Monthly Highs

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Bull Rally Accelerates

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Economists Survey Raises 2021 CPI Forecast To 4.9%

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NY Fed's Logan gives a speech on monetary policy implementation - it's a broad survey of the Fed's recent toolkit modifications / additions, with a focus on overnight reverse repo uptake. But no discussion on taper implementation/details (some analysts had hoped she would have something to say as the manager of the SOMA desk).

  • A few bits in there on future developments in central clearing of Treasuries and central bank digital currencies, as well as a few words on the LIBOR transition, though nothing new.
  • On reverse repo: "The ON RRP facility is working as intended, even as usage expands to new highs."
  • "Just as usage of the facility grew in response to downward pressure on money market rates, it should decline in response to increases in them. For example, if Treasury were to expand Treasury bill supply and interest rates on these instruments rose above the ON RRP rate, investors should naturally reallocate out of the facility and back into these assets. Similarly, if the supply of reserves declines and rates rise relative to the IORB rate, ON RRP balances should naturally recede."
  • "extended periods of elevated ON RRP usage may be a relatively regular feature of the ample reserves framework"