While the US500 and NAS100 juggernaut rolls on and the VIX index remains under 13%, we ask what could derail this risk rally. One event which has shown form through 2023 as a market mover is the US Treasury’s QRA (Quarterly Refunding Announcement). For background the ‘QRA’ – or Quarterly Refinancing Announcement – is where the US Treasury Department announce...
Will Treasury and banks utilize RRP to help raise liquidity at the US Treasury
Top chart shows the RRP yield and US01MY. Bottom view shows the RRP. The theory is that, if the RRP yield is attractive, money will flow into the RRP from bills. When RRP increases, Net Liquidity decreases. (Dowwward pressure in the market.)
An increase in the reverse repo rate will decrease the money supply - ceteris parabis. Commercial bank incentives to hide their funds with the RBI, decrease the supply of money in the markets. There is a limited leak from RRP Pool back and forth, but the overall trend remains higher.
Whee.... fear.... When the Criminals are running for the Hills... Ya may wanna consider the same.... CASH best if you have no clue what to do.
Lookie lokkie here... Ouch again. Panic. Gonna abate? Bulls seems to believe so. We'll see.