Barclays Joseph Abate writes in his latest "​US Weekly Money Market Update" says, "Collateral rates remain stubbornly low despite the pick-​up in bill issuance and heavier fixed rate reverse repo program (​FRFA) participation. These low rates probably reflect the contraction in dealers' Treasury inventories. Money market funds are doing an increasing amount of Treasury repo with the Fed. Yet, non-​Fed Treasury repo balances are off 9% since the end of August. Dealers have simultaneously reduced their Treasury holdings by 10% from their mid-​October peak. With less to finance, dealers have less need to compete with the Fed for money fund financing. We expect the Fed to steadily ratchet up the size of its reverse repo allotments. As dealer inventories appear to have stabilized in recent weeks, additional flows into the reverse repo facility could exert more upward pressure on repo rates."

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