From Bloomberg via Yahoo Finance, May 23:
Fed Facility Tops $2 Trillion as Investors Scramble to Park Cash
The amount of money parked at a major Federal Reserve facility climbed to yet another all-time high, surpassing the $2 trillion milestone for the first time, as investors struggled to find places to invest their cash in the short term.
Money-market funds continue piling into the Fed’s overnight reverse repurchase agreement facility, even as the monetary authority raises interest rates and plans to start unwinding its mammoth balance sheet next month, moves intended to tighten financial conditions and drain the amount of excess liquidity in the financial system. Yet there’s still an imbalance in the Treasury-bill market that as of late has been exacerbated by robust tax collections in the US, and as a result the so-called RRP facility remains a haven for money markets with very few investment options.
Even Jamie Dimon, JPMorgan Chase & Co.’s chief executive officer, said at the firm’s investor day Monday that the Fed almost has to do so-called quantitative tightening since there is too much liquidity out there.
On Monday, 94 participants placed a total of $2.045 trillion at the RRP facility, in which counterparties can put cash with the central bank. The previous record, set on Friday, was $1.988 trillion.
“Treasury is still decreasing bill supply and that seems to be driving the market firmly into the arms of the RRP facility as the only place of refuge,” said Gennadiy Goldberg, a senior US interest rates strategist at TD Securities. “The big implication is that with RRP usage remaining high, QT will drain reserves from the system rather quickly at the start of runoff.”....
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