Banks: The Big Picture
The Macro Trading Floor
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The Fed's Overnight Reverse Repo Facility and the BTFP
The Fed has opened the door for banks meeting those deposit flights with liquidity from the Fed directly in this new collateralized lending program called the BTFP. Money market funds are going to offer higher yields, their safer investments, safer forms of money, money goes there. The moves are relatively large, also larger than anticipated by the Fed. We have seen over $200 billion in two weeks flow into money market funds.
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