COMMENT: Fed - Treasury cash balances dip below $1tn

Credit: REUTERS/Chris Wattie
COMMENT: Fed - Treasury cash balances dip below $1tn

By Divyang Shah

LONDON, Mar 29 (IFR) - Treasury cash balance held at the Fed dipped below the $1tn mark as of the close on Thursday. We will get data for Friday later today but the daily Treasury statement shows that cash balances at the Federal Reserve Account closed at $994bn on March 25, started out at $1.4tn at the beginning of the month, and 1.78tn at the start of the fiscal year. With the Fed QE continuing at a pace of $120bn and the Treasury looking to reduce its cash holdings further, the impact is to increase the reserves in the system, which are already at a record high. Already this has seen o/n repo and o/n SOFR trade in negative/zero with the Fed lifting maximum usage of o/n RRP from $30bn to $80bn at its March meeting. However, EFFR and OBFR have not yet moved below 5bps and still trade around 7bps.

Treasury cash balances

fed reserves

(Reporting by Divyang Shah)

((divyang.shah@refinitiv.com; @dshahTR))

(Reporting by Divyang Shah)

((divyang.shah@refinitiv.com; @dshahTR))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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