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The figures disclosed by the Federal Reserve Bank of New York marked the first time more than $2t had been tucked away in the Fed’s overnight reverse repo facility. The surge of interest in this facility, which acts as an investment of last resort, has been exacerbated by a decline in issuance of short-dated government debt, known as Treasury bills, spurred by a drop-off in government spending.
But the decline in the supply of Treasury bills has meant funds are competing for fewer assets, pushing prices up and prompting fund managers to look for alternatives. That has driven many to the Fed’s RRP facility, including 94 counterparties on Monday. The overnight facility will pay a rate of 0.8 per cent.
https://www.ft.com/content/903e4b43-d6c3-4d00-9323-023b071dcdcb
