FAST FIVE: We Have The First Trillion Dollar Reverse Repo
We Have The First Trillion Dollar Reverse Repo It's official: at exactly 1:15pm today, the NY Fed reported that for the first time ever, 86 counterparties parked over $1 trillion in reserves at the Fed's Reverse Repo Facility for overnight 'safekeeping' and collecting a nice, fat yield of 0.05% – representing hundreds of millions in absolutely free money as these are reserves that the Fed has previously handed out to banks – for free – who then turned around and handed it right back to the Fed where it collected a small but nominal interest.
Of course, it is month-end (if not quarter-end) so we do get some window-dressing but even without it, it's only matter of time before we got consistent $1 trillion prints.
$296 billion during the month of May, $362 billion in June, and $124 billion in July.
If RRP volume continues around the same pace, say $200 billion a month, RRP volume will reach $2 trillion by the end of the year.
However, the RRP volume at the end of the year will be a far larger number due to year-end window dressing, meaning it will likely approach if not surpass $3 trillion on Dec 31, 2021.