US MMFs retrenched to Fed repos as 2024 wrapped up
Allocation needs trump yields, boosting RRP exposure by 125% in December
US money market funds (MMFs) upped allocations to the US Federal Reserve’s reverse repo programme (RRP) by 125% in December 2024, reinforcing the facility’s role in absorbing excess liquidity despite offering yields lower than other short-term investments.
Throughout the month, MMFs’ cash placements in the RRP rose by $212.7 billion, driven by inflows of $246.4 billion from 11 managers, which were partially offset by outflows of $36.5 billion from 12 others.
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