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Money Market Developments: Views from the Desk Lorie Logan – Senior Vice President, MOMA Head and Interim SOMA Manager Annual Primary Dealer Meeting November 4, 2019 Figure 1 Ample Reserves Operating Framework Interest rate Supply of reserve balances Discount Window Rate (primary credit rate) Interest on Reserves Overnight Reverse Repo Rate 0 Demand for reserve balances Reserve balances 2 Figure 2 SOMA Treasury Allocation Relative to Universe SOMA holdings as a percent of SOMA Treasury portfolio Percent Treasuries outstanding as a percent of Treasury universe 40% 30% 20% 10% 0% Bills < 3Y 3Y to 7Y 7Y to 30Y TIPS FRNs Sources: Federal Reserve Bank of New York; U.S. Treasury Department. 3 Figure 3 Outstanding Temporary Open Market Operations $ Billions 300 Term repo ON repo Total repo offered 250 200 150 100 50 0 09/17 09/23 09/27 10/03 10/09 10/16 10/22 10/28 11/01 Source: Federal Reserve Bank of New York 4 Figure 4 Reserve Balances $ billions 2,000 Initiation of repo operations 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 8/29/2018 11/29/2018 2/28/2019 5/31/2019 8/31/2019 Sources: Board of Governors; Federal Reserve Bank of New York staff calculations. 5 Figure 5 Federal Reserve Notes $ billions 2,000 1,750 1,500 1,250 1,000 750 01/03/2007 01/03/2009 01/03/2011 01/03/2013 01/03/2015 01/03/2017 01/03/2019 Source: Board of Governors. 6 Figure 6 Variability of Non-Reserve Liabilities $ billions Distributions of Changes in Weekly Levels of Non-Reserve Liabilities* *Boxes indicate interquartile ranges, and whiskers indicate minimum and maximum outcomes. Data show the distribution of changes in weekly averages of daily figures for liabilities outside the direct control of the Fed (FR notes, Treasury accounts, foreign repo pool, and other deposits) and capital through Oct 23 2019. Liabilities associated with monetary policy instruments (overnight and term reverse repos conducted with private counterparties and term deposits held by depository institutions) are not included. Sources: Board of Governors; Federal Reserve Bank of New York staff calculations. 7
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