FED Net Liquidity has been declining since March 2024 currently at -4.4% y/y, but has remained on a stable range since 2023
- This is despite FED Balance Sheet QT
- The depletion of the reserve repo facility helps keep net liquidity stable despite aggressive QT. This tailwind is no longer available since the reverse repo has almost completely depleted.
- Due to the debt ceiling being hit, the treasury will most likely use its TGA account of ~700B , injecting temporary liquidity into the markets similar to 2023
Hence, FED Net liquidity will most likely continue to be at least stable for some additional months.
