Fed's overnight reverse repo usage surged to $16.318 billion

Summary

Fed Overnight Reverse Repo (RRP) usage surged to $16.318 billion on Friday, Feb 27, a significant increase from the previous day’s $3.796 billion Wallstreetcn. This follows a period of extremely low usage earlier in the week, with volumes hovering around $1 billion .

Impact Analysis

Don’t let the percentage jump scare you—this looks like classic month-end window dressing rather than a signal of systemic stress. We’ve been running on fumes in the RRP facility all month, with prints dipping under $1B earlier this week , so a move to $16B Wallstreetcn feels massive even though it’s historically negligible.

The real takeaway is that the ‘excess liquidity’ buffer is effectively gone. This spike is likely Money Market Funds (MMFs) parking cash for balance sheet optics, and I expect it to wash out by Tuesday. If it sticks above $15B into next week, we might need to talk about collateral scarcity, but for now, this is noise. The trade? Fade the fear on this headline. Instead, watch SOFR spreads next week—without a deep RRP buffer, that’s where the real volatility will show up if funding stress hits.