The Federal Reserve's Reverse Repo facility is rapidly depleting, currently standing at a mere $683 billion. A stark contrast to its peak of $2.5 trillion just a year ago.

This substantial decline is driven by a notable influx of cash into Treasury bills, reflecting a shift towards short-term government debt. The intricate interplay of treasury borrowing amounts, bill issuance, Fed interest rates, and quantitative tightening (QT) is steering this trajectory.

Should the current status quo persist, including consistent treasury borrowing, bill issuance, and Fed policies, the reverse repo facility is poised to exhaust itself in the coming months. The impending emptiness raises questions about the source of funds for government borrowing, signaling a potential force that could elevate interest rates.

This is one of the reasons for this week's pivot. They need to grow liquidty asap! Guess what happens next....