Worst-Case Liquidity Outcome Averted. But Risks Remain

There's still a ~$1 trillion question hanging over markets: How much Treasury issuance will ultimately be absorbed through RRP transformation? The "debt ceiling resolution as a bear case" narrative was poorly understood by many investors due to the somewhat esoteric dynamics involved. Treasury's post-deal cash rebuild would flood the market with bills, and there was no guarantee the majority of that supply would be mopped up by cash parked in the Fed's repo facility. Uncertainty around the ter