Adding to reserves has been heavy during this recent rally, according to this article expected to add even accelerating amounts in late month and April:
biz.yahoo.com
NEW YORK, March 2 (Reuters) - The Federal Reserve on Tuesday is expected to inject reserves to the banking system through a round of overnight system repurchase agreements.
Analysts said the Fed still faces a hefty add need of about $7 billion a day in the current maintenance period that ends next Wednesday.
On Monday, the Fed added more than $8 billion of reserves to the system through overnight repos. Analysts said unknown special factors seemed to have drained reserves more than anticipated, although the factors should be temporary.
''They still have a reasonable add need,'' said Ward McCarthy, managing director at Stone & McCarthy, who noted the add need jumps to $9 billion a day later in the month and $13 billion a day in early April.
As such, he and other analysts expect the Fed to continue adding permanent reserves through outright purchases of coupons.
Federal funds remained tight on Tuesday on what is believed to be lingering effects from Monday's pressure.
Funds were at 4-7/8 percent in early trade, above the 4-3/4 percent target rate.
On Monday, funds traded between 4.25 and 5.5 percent, with an effective rate of 5.10 percent. |
