Citi: As US Treasury supply surges, repo rates to be "dominated" by Wall Street banks

With the increase in US Treasury supply, Citigroup analysts predict that Wall Street banks will occupy a larger share in the repurchase market. He pointed out that the issuance of new US Treasury bonds in the next two years will increase by more than $3 trillion, requiring banks to find an additional $200 billion to $400 billion in repurchase funds. Given that the Federal Reserve's reverse repurchase tool balance is close to depletion, banks' market participation becomes more important. It is expected that high repurchase rates and market volatility will affect banks' lending capacity and capital deployment