Demand for Fed Reverse Repos Rises as Treasury Cuts Bill Supply

Investors are ramping up use of the Federal Reserve’s reverse-repurchase-agreement facility as reduced Treasury bill supply cuts securities available in the money market.

The allotment at the central bank’s daily fixed-rate reverse-repurchase agreements, which are tri-party transactions conducted daily by the Fed Bank of New York, was $159.2 billion today, up from $129.8 billion yesterday, and the most since $242.1 billion on the final day of March. The Fed’s reverse repos, which are offered at a fixed rate of 0.05 percent, have helped stabilize money-market rates, countering the normal trend lower when supply of investable securities declines.