Fed's Overnight Reverse Repo Usage Decreases to $2.03 Billion

Summary

On Thursday, January 15, 2026, the usage of the Federal Reserve’s overnight reverse repurchase agreement (RRP) facility fell to $2.003 billion with 6 counterparties, a significant decrease from the previous day’s $3.223 billion.Wallstreetcn This drop follows a period of elevated year-end demand for the Fed’s liquidity tools, such as the Standing Repo Facility (SRF), which saw record borrowing of $74.6 billion on the last day of 2025 to manage year-end liquidity needs.Sina Finance+ 2 The normalization of RRP usage indicates that these temporary pressures have subsided.Sina Finance

Impact Analysis

This isn’t just a daily data point; it’s a major signal that the RRP facility is effectively empty. For the past couple of years, this facility has acted as the primary shock absorber for the Fed’s quantitative tightening (QT), soaking up excess cash. Now that buffer is gone. From here on, every dollar of QT will directly drain reserves from the banking system. This fundamentally changes the liquidity landscape and makes the financial plumbing far more fragile.

Remember the repo market spike in late 2019? We’re now entering a similar zone of vulnerability. The market might be misreading this as a sign of calm, but it’s the opposite—it’s the quiet before a potential storm. The end of QT is now likely much closer than consensus believes. Any small hiccup in funding markets could force the Fed to pivot. I’m watching SOFR and other short-term funding spreads very closely. This is a trigger to reduce risk and watch for the Fed to signal a change in its balance sheet policy.