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What Are Off the Run Treasuries?
In 2020, we had a massive dollar shortage. Reserve managers were forced to sell their treasuries because the banks operated in their local jurisdictions were short of dollars. The repo market then looked at the off the runTreasury that were now becoming increasingly illiquid and said, I don't want that as collateral. So dealers were forced to buy these off the run treasuries. They couldn't fund their purchases in repo because they weren't useful as collateral. That meant that dealers were getting stuck with these securities they didn't want and couldn't fund.