Posted 12/5/2023, 7:30:00 PM
Declining Reverse Repo Use Signals Growing Confidence in Treasuries Market
- Popular Fed overnight reverse repo facility use has fallen to $834 billion, lowest in over 2 years
- Decline may reflect rising confidence about end of aggressive Fed rate hikes and future cuts
- Falling facility use could provide liquidity boost to $26 trillion Treasury market
- Banks, money funds shifting cash from facility to Treasurys can aid market liquidity
- Benchmark 10-year Treasury yield seen having floor of 3.5-3.75% even in recession