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Yld Curves Bear Steepening


E-MINI S&P (U1): Approaching The ATH


Early Trade Review

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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