Massive amounts of money have found a home in one of the key instruments used by the Federal Reserve to control short-term interest rates, with a presence exceeding $1 trillion for the first time in history.

On Friday, 86 participating institutions deposited a record $1.04 trillion in overnight reverse repurchase instruments. According to data from the New York Federal Reserve, this scale surpassed the high of 991,939 billion US dollars hit on June 30.

Cash flows continue to overwhelm the dollar financing market, spurring a surge in demand for this instrument since the Federal Reserve raised the reverse repo rate from 0% to 0.05% last month. On the other hand, when the central bank buys assets and the Ministry of Finance reduces cash accounts, reserves are also being pushed into the system.

As a result, the liquidity of the financing market continues to expand, especially as the Ministry of Finance tries its best to reduce its cash size to 450 billion US dollars before the debt ceiling is restored at the end of the month. This has already forced the US government to further cut the supply of treasury bills, thereby further exacerbating the imbalance between supply and demand, and boosting demand for reverse repurchases by the Federal Reserve.