NEW YORK, March 9 (Reuters) - U.S. money market funds are expected to bid for $350 billion worth of the Federal Reserve’s reverse repurchase agreements (RRPs) for the upcoming end of the first quarter, J.P. Morgan analysts said on Monday.
There is typically huge demand for the Fed’s reverse repos and near-cash securities at the end of the quarter as investors pare their positions in riskier holdings.
“Over the past several quarter-ends, the Fed RRP has proven to serve as a source of backstop supply when liquidity temporarily dries up in the money markets,” J.P. Morgan analysts wrote in a report.
In addition to its daily RRP operation that has a cap of $300 billion, the U.S. central bank has said it will offer two term RRP operations that mature past March 31.
On March 19, it will offer a $75 billion term RRP operation that matures on April 2, followed by a $125 billion term operation that matures on April 6.
Reporting by Richard Leong; Editing by Bernadette Baum