Key Fed Facility Stabilizes After Shrinking by $1.75 Trillion
- Usage has settled around $440 billion, near lowest since 2021
- Demand has rebounded in the wake of Treasury-bill supply drops
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The drawdown of balances at a key Federal Reserve facility appears to have bottomed out for now, providing a liquidity cushion for the central bank’s reserves during tax season.
Use of the Fed’s overnight reverse repurchase agreement facility — where counterparties like money-market funds park cash to earn 5.3% — has plummeted some $1.75 trillion since June. That’s when the government suspended the debt ceiling, unleashing trillions of dollars of Treasury bill supply and giving investors an alternative to just holding money at the Fed.