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Strategies & Market Trends : World Outlook
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To: Les H who wrote (47446)9/4/2025 4:17:48 PM
From: Les H  Read Replies (2) of 48753
 
ON RRPs Drop to Near-Zero $17.9 Billion, Liquidity Flow into Markets Over, while TGA Refilling Drains Liquidity from Marketsby Wolf Richter • Sep 3, 2025 • 45 Comments
Liquidity now begins to drain out of the markets for the first time since the debt ceiling.
By Wolf Richter for WOLF STREET.

ON RRPs fell to $17.9 billion today – essentially near zero compared to the peak range of around $2.3 trillion that prevailed from May 2022 through June 2023 – and the lowest since early April 2021 when huge amounts of QE were beginning to wash into ON RRPs. In normal times, these Overnight Reverse Repurchase agreements are zero or near-zero. But QE wrecked the normal times. The blue line in the chart denotes the current near-zero level.

This has big implications for liquidity flows out of financial markets. ON RRPs, now being near zero, can no longer supply any noticeable amount of liquidity to the financial markets. But the government’s checking account, the Treasury General Account (TGA), is still getting refilled after the debt ceiling and is still draining liquidity out of the financial markets.

More at Wolfstreet.com

Bank of England hinted at reducing runoff of gilts from the balance sheet, which is resulting in lower interest rates and higher stocks.
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