Another Superb note.. So much great insights.. Ty for Sharing. I do want to ask you about the following comment you made
" The increased supply of bills pushes up their yield, likely enough to incentivise funds to leave the $2.2tr RRP. This provides additional liquidity to asset markets"
It is my understanding that the $2.2tr in RRP already receive a rate from the Federal reserve close to the Fed fund rate. Why do you think they would be incentivised to come out of the RRP?
Excellent Analysis.
Another Superb note.. So much great insights.. Ty for Sharing. I do want to ask you about the following comment you made
" The increased supply of bills pushes up their yield, likely enough to incentivise funds to leave the $2.2tr RRP. This provides additional liquidity to asset markets"
It is my understanding that the $2.2tr in RRP already receive a rate from the Federal reserve close to the Fed fund rate. Why do you think they would be incentivised to come out of the RRP?
With gratitude
A.
Great article and explanations! But hasn't the CS/FED Pozshar said some months ago that the FED has to force long term rates up?