Financial plumbing & market structure updates
Short updates on repo markets, collateral chains, clearing and settlement systems, and the core infrastructure that drives global liquidity.
Standing Repo Facility (SRF) is a policy rate set by the Fed, according to the target rate. so unless the target rate is decreased, SRF rate is unlikely to be reduced
this situation is putting pressure on the Fed to decrease interest rates and start QE soon
the funding could also come from Fed’s facilities, like the SRF or OMO
however, current SRF rate is 4.5%, which is above the yield on T-bills, and Fed is still officially in QT, so no large-scale, longer-term liquidity injections via open market operations
moreover, currently the US Treasury is issuing debt and cash at ON RRP is running low. MMF, dealers and banks purchase those T-bills. if they do not have cash in ON RRP, it will be financed by outflows from bank reserve accounts into TGA
this is one of the reasons why September is historically a bad month for Bitcoin
repo rates increase and borrowing decreases in quarter-ends
this includes the upcoming month of September. in addition, September 15th the corporate tax limit in the US
this reduces global liquidity, so asset prices tend to fall
