On Wednesday, Treasury Borrowing Advisory Committee details showed a healthy debate over investing excess US Treasury cash in the overnight repurchase market.
The prospect prompted a surge in derivatives trades positioned for easier funding conditions and shifts between the two key overnight lending benchmarks.
The advisory body said any benefits would be marginal, but the discussion still stirred money-market speculation around how Treasury cash management could affect short-term rates.
Will the Treasury's giant cash pile permanently alter the Fed's control over interest rates if it enters the repo market?
Could the Treasury's plan to lend its cash backfire, creating more instability in the very market it aims to soothe?