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Author: Admin | 2025-04-28
Will likely involve around $600 billion in injections between February 12 and April 11. After the April tax season, a temporary replenishment of the TGA could occur, but until a new debt ceiling deal is reached, the Treasury will presumably continue to spend down existing cash reserves.While some observers are hailing this development as a de facto round of QE, Tomas underscores that the final net impact depends on two critical drains on liquidity: The Federal Reserve is rolling off assets at about $55 billion per month, which Tomas expects to continue at least through the next FOMC meeting in March. Over two months, that translates to an estimated $110 billion liquidity reduction.With the Treasury issuing fewer T-bills due to debt-ceiling constraints—termed “net negative T-bill issuance”—money market funds may have fewer short-term government securities to buy. This scarcity could prompt them to park more cash in the Fed’s Reverse Repo facility, which effectively drains liquidity from the broader market.Tomas notes: “This may incentivize money market funds to park cash in the Fed’s Reverse Repo, potentially pushing this chart up… Reverse Repo usage increasing would be a liquidity drain, as money would be moving away from markets and into the Reverse Repo facility at the Fed.”Overall, the true scale of the TGA-based stimulus remains uncertain. Last week, net injections into the system were estimated at $50 billion, a figure that could fluctuate in the weeks ahead as QT and Reverse Repo demand evolve.Another key piece of the puzzle is the ongoing
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