The overnight reverse repo market (ON RRP) sat at $887 billion last night, down from $2.6 Trillion at the peak on December 30th 2022. As the Fed slowly removes liquidity from the system through QT, Banks and Non-Bank institutions are parking less capital overnight at the Fed. Think of the reverse repo balance as excess liquidity in the system. The RRP balance could be at zero by March 2024 (or shortly thereafter) at the current RRP drawdown trajectory. Perhaps when the ON RRP balance gets close to zero this dovish, interventionist Fed will stop its QT program. Something to watch for.

Full article here: https://tek2day.substack.com/p/the-reverse-repo-market-may-be-telling