U.S. LIQUIDITY RESEARCH
Fed Net Liquidity
Understand the common Fed assets minus TGA minus ON RRP proxy — and its limitations.
A widely followed net-liquidity proxy subtracts the Treasury General Account and overnight reverse repurchase balances from Federal Reserve assets. The intuition is that Treasury cash and reverse repos can absorb liquidity that would otherwise remain in the banking or market system.
The proxy is useful but incomplete. It does not directly measure bank-credit creation, funding-market stress, the distribution of reserves or offshore dollar conditions. ULI therefore keeps classic net liquidity as a separate reference series rather than treating it as the full signal.
Comparisons should use consistent units and observation dates. Weekly balance-sheet series and daily funding series also require bounded, documented alignment rather than unlimited forward filling.
MACRO TRADER LENS
How a macro trader can use this research
Fed assets minus TGA minus ON RRP is best read as a near-term reserve-liquidity impulse. It is informative, but it is not a complete measure of bank credit, reserve distribution or offshore dollars.
Separate stocks from flows
Track the level and weekly change in Fed assets, TGA and ON RRP, while checking observation dates and release lags. A large balance is different from a fresh liquidity impulse.
Frame the near-term impulse
Use rapid TGA drawdowns or RRP releases to form a tactical reserve-liquidity hypothesis, then test whether the effect persists beyond the calendar or settlement window.
Check reserves and funding
Look for confirmation in reserve balances, bank credit and SOFR relative to IORB. Asset prices alone are not proof that the reserve channel is working.
Know the proxy's boundary
Conviction should fall when Treasury issuance and its maturity mix, bank liquidity demand or funding stress overwhelms the headline net-liquidity move. A depleted ON RRP pool also changes the proxy's marginal meaning.
Built from traceable sources
Federal Reserve and FRED series, New York Fed funding data, U.S. Treasury cash balances and cross-asset market prices.
Research information only — not investment advice.