The New York Federal Reserve Bank’s popular reverse repo program set a record Thursday for overnight demand, a same day the central bank doubled the limit for individual user to $160 billion.
The program, which allows banks, money-market funds and other financial firms to park cash overnight at the Fed, while earning 5 basis points, has become increasingly popular with Wall Street firms flush with cash, who are looking for save, short-term havens to stash it.
Thursday’s operation saw a record $1.35 billion parked in the facility from 77 counterparties. The Fed doesn’t immediately disclose the names of individual users, but provides additional historical data on a delayed basis.
Expectations have been for demand to ramp higher heading into year-end, given the typical volatility and liquidity woes that can plague financial markets, but also this year because of the unresolved debt-ceiling issue in Washington, a Treasury-bill market that’s been shrinking this year and expected wrangling in Congress over President Biden’s proposed $3.5 trillion spending bill.
U.S. stocks climbed Thursday, with the Dow Jones Industrial Average
closing up 500 points, a day after the Fed said it may announce in November a plan for tapering its $120 billion in monthly Treasury
and mortgage-backed securities, and potentially raise benchmark policy rates at a quicker pace than initially expected.