Halister News

(Bloomberg) -- Should Treasury/agency supply become constrained, Fed’s RRP will be a “natural backstop,” JPMorgan strategists led by Alex Roever said in note.

• Government funds have shown “strong preference” for agency securities and own more than half of money market-eligible agency coupons and discount notes
• At end-3Q, many funds invested at least one-third of portfolio into the RRP facility; there’s a chance allocations “go even higher” at year-end
  • Also likely more funds will “max out” at $30b counterparty limit