📍 Reverse Repo at the Fed bottom out 4 years

📌 The Reverse Repo balance (RRP) on August 13 is only $28.8B - the lowest level since 2021. RRP is the cash reserve of banks at the Fed, where they deposit money overnight to receive the floor interest rate outside the free market.

📌 Since the outbreak of COVID, RRP has ballooned to over $2,000B due to excess liquidity, but has now returned to a state of depletion:
- The short-term liquidity reserves of the banking system are almost depleted.
- The Fed has lost a "vent" to temporarily suck some money out of the market.
- The interest rates in the free market may fluctuate more sharply if the short-term capital demand suddenly increases.

With RRP close to 0, any liquidity shock will have a direct impact on the interbank market, rather than being cushioned by the Fed.