Less Capital Parked with the Fed Means Less Economic Liquidity

The overnight reverse repo market shows that companies are parking less capital with the Fed today versus 3 months ago and a year ago.

• The September 3rd overnight reverse repo level was $349 billion, down from a $400-500 billion range over the past 3 months (see charts below).

  • The overnight reverse repo market balance peaked at $2.6 trillion on December 30th 2022.

• Our view is that the economy is less flush with cash versus 2023, 2022 and 2021 despite the Biden Administration’s inflationary, deficit spending efforts to prop up the economy.