Treasury advisory committee discusses US Treasury investment in overnight repo market
Updated
Updated · Reuters · May 6
Treasury advisory committee discusses US Treasury investment in overnight repo market
9 articles · Updated · Reuters · May 6
Minutes released Wednesday showed the panel debated lending part of the Treasury's roughly $879 billion cash balance into repo markets from New York.
The move could recycle cash from the Treasury General Account back into banks, easing month-end or quarter-end funding strains while seeking returns without disrupting markets.
Its viability depends on the gap between repo rates and the Fed's 3.65% reserve rate; SOFR is about 3.62%, and analysts say any shift remains some way off.
Will this Treasury plan finally end the extreme volatility that plagues overnight funding markets?
Is the Treasury about to cross into the Federal Reserve's territory of managing market stability?