U.S. money funds cut Fed reverse repos holdings in April: JPMorgan

NEW YORK (Reuters) – U.S. prime money market funds slashed their usage of the Federal Reserve’s reverse repurchase agreements in April from March on increased short-term debt supply issued by banks and Wall Street dealers, J.P. Morgan Securities analysts said on Monday.

Prime money funds reduced their holdings of the Fed’s reverse repos by $148 billion or 86 percent to $24 billion in April versus March, they said.

They said in a research note these funds that can invest in riskier non-Treasury debt have used the central bank’s program to compensate for a drop in private debt supply at quarter-end when banks and dealers shrink their balance sheets.

The Fed’s reverse repo, or RRP, facility is aimed to achieve its interest rate goal when it begins raising rates

Meanwhile, prime funds raised their holdings of bank paper by $76 billion in April to $1.083 trillion, J.P. Morgan said.

(Reporting by Richard Leong; Editing by Meredith Mazzilli)

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