Barclays analysts warn that bank reserves may deplete soon, potentially leading to shift to scarce reserves.

From Investing.com: 2024-07-13 06:01:02

Barclays analysts warn that bank reserves, currently ample, may deplete soon. Transition to higher rates could happen at $3.1 trillion reserves. Quantitative tightening to end in December. Increase in FF-IORB spread suggests reserves not scarce yet but could change. Reserves falling may lead to spread narrowing, signaling shift to scarce reserves. Fed uncertain about QT pace impact.
According to Barclays, banks reaching steep demand curve soon. Fed cautious, tapering Treasury roll-offs due to curve uncertainty. Monitoring reserve demand curve crucial for shift to scarce reserves. Flat FF-IORB spread shows no scarcity yet, but situation might change. Need for close monitoring highlighted as year progresses.



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