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Fed’s Money-Market Fix May Be Affecting Where People Park Cash

  • Usage of reverse repo facility on Monday spiked to $27 billion
  • Investors may be getting crowded out of bill and repo markets

While the Federal Reserve has said short-term interest rates are back under control following September’s upheaval, its solution may be having knock-on effects for money-market investors.

The amount of cash that was parked at the central bank’s facility for overnight reverse-repurchase agreements on Monday spiked to $27 billion. That’s the most since the end of the first half of 2019, when money-market funds and other counterparties pushed usage up to $44 billion. And although usage typically picks up around the 18th day of the month, this month’s increase is noticeably bigger.