On Friday, a statement was made by the Fed for the leverage rates (SLR) provided to banks. The Fed announced that the easing in leverage rates for large banks will end on March 31st. In the statement made, it was stated that the end of the related program will not affect the liquidity in the Treasury bills market. It is emphasized that the decision will ensure that the capital demands of banks will not be affected, while it is stated that large banks have plenty of liquidity.
Fed policymakers worried that the end of the SLR exemption would prompt banks to stop buying Treasury bonds or to stop accepting deposits that would send cash to the money markets. Treasury auctions will be followed this week (there are 2, 5 and 7 year auctions), if demand is low, bond market sales may intensify again.
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