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Strategies & Market Trends : News Links and Chart Links
SPXL 219.63-1.4%Dec 1 4:00 PM EST
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To: Sam who wrote (27350)9/18/2022 10:26:48 AM
From: Les H   of 29601
 
The Fed is raising short-term interest rates. If the excess cash were to go into treasury securities, it would lower those yields or interest rates which would work against the policy of reining in the economy to bring down inflation.

If the funds parked at the reverse repurchase facility doesn't come down, the market makers will have to absorb the supply of treasuries from the government and the Federal Reserve. That will reduce liquidity available to other markets. I recall that was noted in September 2019 when the Fed launched Quantitative Easing in response to market conditions.
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