Wednesday, June 9, 2021

Surging Demand For Fed's Reverse Repo Facility

The Fed
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Subscriber Comments

Fed is selling Treasuries in the Reverse Rep facility at an alarming rate.

The Fed’s reverse repo program lets eligible firms, like banks and money-market mutual-funds, park large amounts of cash overnight at the Fed, at a time when short-term funding rates have fallen to next to nothing, and finding a home for cash has become harder.

Either there is too much cash or not enough collateral. 2019 it was not enough collateral. Could be the same in 2021, but everyone is covering it up. It could easily be too much cash and no place to park it for a positive return.

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