Fed's overnight reverse repo agreement usage scale increased to $2.852 billion

Summary

On Thursday, January 29, the usage of the Federal Reserve’s overnight reverse repo (RRP) facility increased to $2.852 billion across 4 counterparties, up from $1.103 billion on the previous trading day.Wallstreetcn

Impact Analysis

This is basically a rounding error. The Fed’s RRP facility has collapsed from over $2 trillion to single-digit billions, so a daily fluctuation of a billion or two is completely meaningless.Wallstreetcn The real story here isn’t this number, but what it represents: the massive RRP liquidity buffer is gone. The ‘easy’ part of quantitative tightening, where the Fed’s balance sheet runoff was absorbed by draining the RRP, is over.

From now on, QT will more directly impact bank reserves, making the financial plumbing much more sensitive to funding pressures. So while this specific data point is irrelevant, it’s a reminder that we’re in a new regime. We need to be watching for any signs of stress in SOFR or other money market rates. The bottom line is the system has less slack. No trade on this, but it raises the alert level for funding market stability.