BREAKING: Demand for the Fed’s Reverse Repo (RRP) facility has fallen to 4.1 billion, the lowest since April 2021. RRP usage, one of the financial system’s key excess liquidity metrics, has declined -2.5 trillion since its December 2022 peak. Meanwhile, bank reserves at the Fed dropped below 3.0 trillion, a level that many Fed officials consider the red line between abundant and scarce reserves. Such a low level can strain the financial system, making it harder for banks to lend money, and can cause spikes in market volatility or even bank failures. As a result, Fed Chair Powell just said that the end of QT may be approaching in the coming months as liquidity conditions tighten. Market liquidity appears to be at a critical point.(The Kobeissi Letter)