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1) When the Fed sells Treasuries in the open market, bank reserves typically increase.
2) Selling securities from the SOMA portfolio or allowing them to run off tends to add reserves to the banking system.
3) In a repo operation, the Fed lends cash against Treasury collateral, which temporarily adds reserves.
4) In a reverse repo operation, the Fed borrows cash overnight and provides securities as collateral, which temporarily drains reserves.
5) In today’s ample-reserves framework, administered rates like IORB and ON RRP do most of the work to keep EFFR in range; OMOs are mainly plumbing.
6) ON RRP and QE are the same because both inject reserves into the banking system.
7) The Standing Repo Facility (SRF) acts like a ceiling-like backstop for money market rates by lending cash at a posted rate to eligible counterparties.
8) During the September 2019 repo market spike, the Fed used temporary repo operations to inject reserves and stabilize short-term rates.
9) OMOs are primarily aimed at changing long-term term premia and 10-year yields; that’s why they’re called large-scale asset purchases.
10) One reason to use reverse repos in day-to-day operations is to prevent the funds rate from slipping below the lower end of the target range.