On Friday, the usage of the Fed RRP stood at $98.356 billion, marking the lowest level since 2021. On December 30, 2022, it had reached a record high of $2.55 trillion.
And on December 18, along with the announcement to lower the target range for the federal funds rate, the Federal Reserve also reduced the RRP rate by five basis points to align with the lower end of the policy rate target range. This was the first adjustment to this rate since 2021.
How should we interpret these two things from the global liquidity perspective?
They acknowledge that liquidity is getting tighter evidenced by drain of RRP and 5bp drop in effective anchor rate on RRP is to try to avoid end-quarter spikes. Good luck there! Big question is why Fed is not doing more? Is it that they really do want a strong USD to squeeze China?? Well so far it's working
Likely that's true. This chart shows liquidity injections. They will have to inject more cash soon. Banks' reserves have flat lined for weeks and SOFR-FF spreads are frequently blowing out on a daily basis: 34 of the 77 extreme reads on this spread in 2024 have occurred since early November.
Tks, but hard to read anything, very low resolution. Not even the country names are readable. Please, something a little bit more clear highly appreciated. Tks again.
You can try https://imgur.com/upload as a quick alternative and then sharing the link generated from there. A sure solution I recommend would be uploading the image to google drive or icloud or one drive and then using the "Share Public Link" functionality to generate a link to post here. This will always allow people to download at original resolution. Also, it wont matter where you post it if the original is blurry to begin with. Be careful to not share access to your entire cloud though.
If you are concerned with gating access, there are solutions which allow gating by email. I'm not sure how well they integrate with substack but other substack publishers such as Citrini use things like docsend eg. https://citrini.docsend.com/view/g4fhtipv2fm3vmzd
Thanks Michael for the update. Do you have a high-resolution image of the chart so we could see which central banks are easing the most. The uploaded image is not clear due to low res.
Thanks Michael, do you have a table which shows the absolute values and rate of change from prior periods to help contextualise which markets have the had the most significant improvement in liquidity? Regards
Hello Michael,
Happy holiday.
On Friday, the usage of the Fed RRP stood at $98.356 billion, marking the lowest level since 2021. On December 30, 2022, it had reached a record high of $2.55 trillion.
And on December 18, along with the announcement to lower the target range for the federal funds rate, the Federal Reserve also reduced the RRP rate by five basis points to align with the lower end of the policy rate target range. This was the first adjustment to this rate since 2021.
How should we interpret these two things from the global liquidity perspective?
Thank you
They acknowledge that liquidity is getting tighter evidenced by drain of RRP and 5bp drop in effective anchor rate on RRP is to try to avoid end-quarter spikes. Good luck there! Big question is why Fed is not doing more? Is it that they really do want a strong USD to squeeze China?? Well so far it's working
Dollar wrecking ball. Thank you for the answer.
But Fed won't cut in January 100%
Likely that's true. This chart shows liquidity injections. They will have to inject more cash soon. Banks' reserves have flat lined for weeks and SOFR-FF spreads are frequently blowing out on a daily basis: 34 of the 77 extreme reads on this spread in 2024 have occurred since early November.
Tks, but hard to read anything, very low resolution. Not even the country names are readable. Please, something a little bit more clear highly appreciated. Tks again.
Sure. Will try to do something, but limited by resolution of software used by Substack.
You can try https://imgur.com/upload as a quick alternative and then sharing the link generated from there. A sure solution I recommend would be uploading the image to google drive or icloud or one drive and then using the "Share Public Link" functionality to generate a link to post here. This will always allow people to download at original resolution. Also, it wont matter where you post it if the original is blurry to begin with. Be careful to not share access to your entire cloud though.
If you are concerned with gating access, there are solutions which allow gating by email. I'm not sure how well they integrate with substack but other substack publishers such as Citrini use things like docsend eg. https://citrini.docsend.com/view/g4fhtipv2fm3vmzd
from https://www.citriniresearch.com/p/the-citrindex
Hope that helps.
See notes ...myattempt
Thanks Michael for the update. Do you have a high-resolution image of the chart so we could see which central banks are easing the most. The uploaded image is not clear due to low res.
Would be an interesting visual to see this chart with bars sized based on size of balance sheet or GL in the country.
Thanks Michael, do you have a table which shows the absolute values and rate of change from prior periods to help contextualise which markets have the had the most significant improvement in liquidity? Regards
light in the darkness
Thanks Mike! Any thoughts on JP presser?
Some positive news were much needed today, thanks Michael.