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A Little Flatter


Futures Little Changed, Curve A Little Steeper


Long Weekend In Japan


China May Increase Fiscal Spending In H2: Newspaper


Drops From Session Highs

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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