As time ticked down on debt-ceiling stalemate in Washington, Wall Street companies held a record $1.605 trillion of cash overnight in the Fed’s popular reverse repo initiative.
- On Thursday, US Congress passed a short-term funding measure to extend government spending through Dec.3 while preventing a partial shutdown hours before the set midnight deadline.
- As the standoff continued, 92 companies participated in the Fed’s Thursday reverse repo program. The operation allows banks and government-sponsored businesses as a short-term haven for storing cash while earning 5 basis points overnight.
- Earlier in Sept., the Fed nearly doubled the cap every counterparty can commit to the overnight facility to $160 billion each. The program has expanded in popularity in recent months.
- The latest increase in demand was not anticipated, but due to the contracting Treasury-bill market, the typically volatile year-end period, and hatred in Washington over government spending.
US stocks disposed of sharply on Thursday, with the Dow Jones Industrial Average, DJI up +0.30%, dropping 456 points, as booking posted its worst monthly loss since October 2020.
DXY down -0.17%, EUR USD up +0.17%