The Wall Street Journal posted a story, "Repos Falling Out of Favor Since Fed Lifted Rates." It says, "The Federal Reserve has seen demand fall to a two-​year low for a program it created to help it raise interest rates, and expanded last year in anticipation of heavier use. This hasn'​t hampered the Fed'​s ability to control rates, but reflects how, more than seven years after the financial crisis, policy makers are still experimenting with new financial tools and may sometimes be surprised by how markets respond. Through the temporary program, called overnight reverse repos, the Fed takes cash from a variety of lenders in exchange for Treasury securities, and pays interest to participants. Its aim is to help set a lower boundary, or floor, for short-​term interest rates. The Fed used the program with other tools to raise its benchmark short-​term rate in December by a quarter percentage point. Officials worried then that excess demand for the repos could alter U.​S. money markets in unexpected ways, so they also boosted the daily volume allowed to around $​2 trillion from $​300 billion. Since then, use of the Fed'​s repo facility has fallen to its lowest level since early 2014. Daily use of the Fed repo program this month has averaged $​33.​4 billion and touched a two-​year low of $​16.​6 billion on April 13, the latest available Fed data show. This compares with a daily average of $​67 billion in March and $​141 billion in December. Some analysts said the decline partly reflects money-​market funds shifting their attention to higher-​yielding substitutes. The Fed pays an interest rate of 0.​25% on its repos. Treasury bills maturing in six months, on Oct. 27, are yielding 0.​391% and private "​general collateral" repos backed by Treasurys are yielding 0.​341%. But the extent of the drop-​off suggests other market forces that are not yet understood." It continues, "​A spokeswoman for the New York Fed declined to comment on market action driving the declining use in the program. `​Simon Potter, head of markets at the Federal Reserve Bank of New York, acknowledged in a February speech, "Usage [​of the overnight repo program] has come down" as private money market rates rose. "​Even with zero usage, the [​repo] facility could still be effective" in controlling rates, he said. The turnaround in the program is surprising because it comes at a time of great demand for Treasurys, which the Fed'​s repos offer as collateral. U.​S. money-​market funds are converting to investing only in government securities by an October deadline to avoid more stringent regulations. Barclays PLC expects departures from credit funds to reach around $​350 billion, with most of the money flowing into government-​only funds. Other analysts speculated there may be seasonal factors involved in the shift. "We don'​t have a wonderful explanation for the diminished participation," wrote those at Stone & McCarthy Research Associates in an April 11 note to clients, adding that redemptions from funds associated with the mid-​April tax filing deadline may be crimping demand for the Fed'​s repo program." In other news, the New York Fed'​s Liberty Street Economics blog featured a post, "What'​s Up With GCF Repo?." It says, "In a series of four posts we take a close look at the GCF Repo market and how it has evolved recently. This first post provides an overview of the GCF Repo market and evaluates its size relative to that of the tri-​party repo market as a whole. We also explain what interbank GCF Repo is and show what share of the market it represents."

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