Fed Sees Record $756 Billion Demand for Reverse Repo Program And May Hit $1 trillion

• Fed Sees Record $756 Billion Demand for Reverse Repo Program And May Hit $1 trillion
  by Joy Wiltermuth, https://www.marketwatch.com/
  Mix of pressures expected to push overnight demand to $1 trillion
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  Banks and money-market funds using the Federal Reserve’s overnight reverse repo program parked a record $755.80 billion in cash with the central bank on Thursday, a day after policy makers tweaked the facility’s payout.
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  High demand for the facility since April underscores how awash financial markets have become with cash during the pandemic, as trillions worth of fiscal and monetary stimulus slosh through the economy.
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  With interest rates low globally, banks and money-market investors have been eager to avoid negative yields and have been parking cash in the Fed facility, which as of Thursday pays 0.05% instead of 0%. It “isn’t a lot, but it’s better than zero,” said Jim Vogel, interest rate strategist at FHN Financial, about the Fed’s bump up in its reverse repo rate.
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  “When the Fed opened up this new avenue, $250 billion of fresh demand came in overnight,” Vogel said. The Fed’s decision Wednesday to boost the rate it pays on excess reserves and on the overnight reverse repo facility comes as part of a broader strategy to keep a grip on short-term rates, while helping to stoke the U.S. economic recovery.
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  Fed Chair Jerome Powell on Wednesday also reiterated that it still was too early for the central bank to raise short-term rates above its current 0%-0.25% target range or trim its near $120 billion-a-month bond buying program.
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