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Reserves Remain Elevated As ON RRP Drops; BTFP Takeup Ticks Higher


A few observations on the Fed's latest balance sheet update out Thursday:

  • ON RRP takeup dipped below $1T yesterday for the first time since Aug 2021. On Weds it had been just above that mark, with the TGA remaining relatively steady vs the prior week (at $753B as of Wednesday) - with reserves rising all the while, up $46B last week (and $45B for the month) to remain above $3.3T.
  • In the past week, the fall in ON RRP has been offset almost one to one by the rise in reserves (-$55B ON RRP, vs +$46B reserves/+$2B Currency In Circulation/+$2B foreign Reverse Repo/+$2B other). As such, there is still little sign of reserve scarcity developing imminently.
  • Fed assets were basically unchanged, down $6B on account of $8B lower usage of emergency lending and liquidity facilities.
  • Re the latter, "other credit extensions" (temporary loans to the FDIC) dropped $12B, but Bank Term Funding Program takeup rose by $3.9B - the biggest weekly increase since early June. That comes in the week after Fed Chair Powell said that the decision on whether to renew BTFP will come in Q1 of 2024 (ahead of the Mar 2024 expiry).

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