Over the last five years, the Treasury decided to maintain large cash balances at the Fed for a variety of reasons. However, those levels have jumped off the charts post the COVID-19 fiscal stimulus response. We go back and look at the interplay of the TGA and RRP versus the evolution of flows in money markets. In my view, the Fed/Treasury response satiated the mad dash for cash. Now comes the hard part of prying some of that money away and encouraging it to move out the curve and into risker assets ahead.
TO READ THIS HIVE EXCLUSIVE
SUBSCRIBE TO MACRO HIVE PRIME