FX weekly: A woke Fed should taper MBS purchases ASAP

“We all want an economy where everyone has the opportunity to contribute to and benefit from prosperity,” – Jay Powell during an appearance at the Economic Club of Washington, D.C. The market is flooded with USD reserves relative to collateral, why the O/N RRP activity continues to surge. It seems as if every new added USD ends up at the O/N RRP facility currently, which effectively sterilizes the liquidity addition. We hence pondered over the course of the week whether we are close to reaching a peak in the USD liquidity abundance (Global: Close to peak USD liquidity abundance! Receive 5yr EURUSD xCcy basis) and … (full story)

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