money market liquidity remains ample, with repo (SOFR) volumes approaching new heights alongside the Fed's foreign repo pool. bank reserves, meanwhile, remain elevated with a reduced QT
Hi Conks, I have a question in relation to the Foreign Repo. Is this actually QE like scenario, where the FED is just lending bills to other CBs to have dollar liquidity and if the actual Foreign RRP is increasing why the dollar doesn't have weakness?
maybe some collateral was pledged to the BTFP and is now being deployed in repo but the amount will be small compared to the large drawdown in that chart
Hi Conks, I have a question in relation to the Foreign Repo. Is this actually QE like scenario, where the FED is just lending bills to other CBs to have dollar liquidity and if the actual Foreign RRP is increasing why the dollar doesn't have weakness?
no QE here
the FRP is a temporary swap of dollars for Treasuries, not an outright purchase by other central banks
no money is created
instead the Fed swaps reserves for RRPs on its balance sheet
After the BTFP execution, the volume of US Treasuries in the repo market plummeted.
Do you have any comments on this, as it seems that US Treasuries held in the BTFP should return to the market until next March?
I'd really like to hear what conks has to say.
"the volume of US Treasuries in the repo market plummeted."
do you have a source?
https://www.newyorkfed.org/data-and-statistics/data-visualization/tri-party-repo#interactive/volume
i don't see a big connection between those two
maybe some collateral was pledged to the BTFP and is now being deployed in repo but the amount will be small compared to the large drawdown in that chart
Thanks!
I would have thought RRPs would be nearly zero by now. Hmm.
repo rates need to rise