I would argue the opposite.
The current RRO market rate is 0.4% which means that banks are willing to lend out their money to the Fed at 0.4% - a lower interest rate than other assets (e.g mortgages, business/personal loans, etc.). If there were valuable assets to invest in, the Banks would be making loans out for the purchase of these assets (and not to the Fed)
So im sorry for editing my post, but i only did it to clarify my point. But i see what you mean, the question is why are banks taking the 0.4% interest with so much money and why is the trend increasing? Imo its because they THINK other assets are overvalued simply because they are near historic highs? But when you look at the amount of money chasing that 0.4% then its kinda obvious that other assets are undervalued. Not sure if that makes sense
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