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Fed liabilities saw two large moves in the week to June 16 (the date of the FOMC decision at which the Fed raised ON RRP and IOER rates): the Treasury General Account shrank by $76B, the 2nd largest weekly contraction since March, while reverse repo takeup soared $227B. This is the first time since 2017 that the size of total ON reverse repo was larger than the TGA.
Source: Federal Reserve, MNI
- This doesn't capture the post-FOMC rise in the non-foreign ON RRP alone to around $750B on Thursday and Friday, which likely reflects GSE flows into the facility in order to take advantage of the new +0.05% rate on offer (as Wrightson ICAP points out, previously they just left their cash in their Fed accounts, since both paid zero).
- ON RRP in general is likely to remain elevated in size amid the continued growth in reserves. Barclays writes that it's likely to remain in a range of $750-800B, depending on how many deposits banks shift to the facility.
|Liabilities||Reserves||US Treasury General Account||Reverse Repo (Foreign)||Reverse Repo (Dealers)||Currency In Circulation||Other*|
|Last Week's Net Change (USDbn)||-11.0||-76.3||4.8||226.9||-1.5||-1.5|
|4-Week Net Change (USD bn)||81.8||-212.2||-5.3||18.0||10.0||40.4|
|Total Holdings (USD bn)||3905.7||653.9||222.8||520.9||2178.6||631.6|