What are the true consequences of QE? More frequent liquidity events, short term rates at 0%, dysfunctional repo, and a more fragile system; that’s what.
With markets & leverage at extraordinary levels, sky high reverse repo takeup is another sign that the financial system is vulnerable to shock. Caveat emptor!
Takeup of the Fed’s Overnight Reverse Repo facility has surpassed its Covid high, reaching ~$300 bn in the last 3 weeks. Why the sudden & dramatic increase?