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Reverse Repo Sees Lowest Uptake Since June

FED
  • RRP uptake drops a further $35B to $2.069T, the lowest since Jun 6 prior to the FOMC ramping up its hiking pace.
  • In doing so it passed through the most recent low of 2.087T (Nov 15) that was seen partly down to mid-quarter Tsy settlements and cash market repositioning after the US CPI release the prior week sparked a significant Tsy rally that made repo rates relatively more attractive.
  • Analysts see a material pullback over the next year, with GS forecasting RRP usage to fall $750B by end-2023 and MS estimating RRP balances of around $1.2T by end-2023.

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