Fed Quantitative Tightening means lower SOMA balances, which means opportunity for Treasury lenders

A recent analysis we conducted of Federal Reserve System Open Market Account (SOMA) balances suggests opportunities ahead for lenders of US Treasuries (UST). We already saw a pocket of the UST specials repo market outperform in 2023 as inventory was unavailable from the Fed. The benefits ought to increase through 2024. Here’s what the numbers look like.
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