Treasury Cash in Repo Market Wins Favor at NY Fed Panel

New York Fed panel participants endorsed the US Treasury periodically investing some of its cash in private repo markets, a policy first broached in May. Market participants said the shift would bolster repo liquidity and generate returns on funds currently parked at the Fed. The Treasury General Account stands at just under $1 trillion and functions as the government's checking account. Moving TGA cash into repo would convert it into banking sector reserves when withdrawn, complicating Fed liquidity management. Panelists, including Goldman Sachs' Richard Chambers and BNY's Frank Gutierrez, said new cash would add "ballast" to money markets. Participants urged predictable, well-communicated operations, preferably early in the trading day, and suggested a possible TGA threshold for triggering investments. The discussion comes as the Treasury's upsized debt buybacks have largely foundered amid rising borrowing costs.