– Fed’s RRP balance drops to 288B, lowest since 2021, as 14 institutions deposit funds.
– Treasury’s short-term debt issuance diverts funds, reducing RRP balance from 2.14T to current level.
– RRP near exhaustion risks draining bank reserves, critical for market stability and Fed’s balance sheet reduction.
– Fed slows quantitative tightening, cutting Treasury cap to 50B/month, while MBS cap remains at 350B.
– Strategists predict reserves may fall below 2.9T by September, with Fed aiming to reduce to 2.7T without pressure.