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Takeup of the Fed's overnight reverse repo facility by domestic participants has eclipsed $800bn, and including foreign participants' participation, it's eclipsed $1trn for the first time.
- In the context of the entire balance sheet, though, that's not unprecedented: at 13% of total Fed assets/liabilities, it's just shy of the 2015 high of above 14%. Note the facility was opened in September 2013, but only used for operational purposes starting September 2014.
- That said, expectations are for a continued rise in ON RRP domestic takeup, potentially above $900bln at quarter-end next Wednesday Jun 30. That would bring the size up to 14+% of the total balance sheet.
Source: Fed, MNI
- The Fed seems very comfortable with this size of takeup, with speakers since the June FOMC meeting shrugging off the adjustment in ON RRP rates as technical.
- The facility continues to keep a lid on reserve growth: bank reserves slipped to the lowest since March this week, despite a $300bln reduction in the Treasury General Account.
|Liabilities||Reserves||US Treasury General Account||Reverse Repo (Foreign)||Reverse Repo (Dealers)||Currency In Circulation||Other*|
|Last Week's Net Change (USDbn)||-140.0||80.8||19.5||363.4||-0.2||-0.2|
|4-Week Net Change (USD bn)||-85.9||-77.8||22.1||292.7||8.3||-31.6|
|Total Holdings (USD bn)||3765.7||734.7||242.3||813.7||2178.5||416.4|