US dollar glut drives usage of Fed reverse repo facility to record – Bloomberg

As per the latest analytical piece from Bloomberg, the flood of cash into the US funding markets propel the demand for the Federal Reserve’s (Fed) key facility to help control short-term rates to the record high on Thursday.

“Fifty participants on Thursday parked a total of $485.3 billion at the overnight reverse repurchase facility, in which counterparties like money-market funds can place cash with the central bank,” said the report. “That surpassed the previous record volume of $474.6 billion from Dec. 31, 2015, Fed Bank of New York data show, and was an increase from $450 billion on Wednesday,” added Bloomberg.

It was further clarified in the piece that the tsunami of cash has driven yields on short-term securities from repo agreements to Treasury bills near or below zero.

The article also argues that the massive buildup of dollars in the funding market is also adding fuel to the debate about just when and how quickly the Federal Reserve ought to begin dialing back the pace of asset purchases it is undertaking.

Amid all these chatters, the US 10-year Treasury yields printed a second positive day but the US dollar slipped from the weekly top ahead of the key US Core PCE Inflation data.

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