Core Insights - The U.S. banking system's reserves are a key factor in the Federal Reserve's decision to continue reducing its balance sheet [1] - As of the week ending October 22, bank reserves decreased by approximately $59 billion, reaching a low of $2.93 trillion, the lowest level since the week of January 1 [1] - Following the increase in the debt ceiling in July, the U.S. Treasury has intensified debt issuance to rebuild its cash balance, which withdraws liquidity from the Federal Reserve's balance sheet [1] - The ON-RRP (Overnight Reverse Repurchase Agreement) tool is nearly depleted, leading to a continuous decline in commercial bank reserves held at the Federal Reserve [1] - Analysts from JPMorgan, Bank of America, and others expect the Federal Reserve to halt the reduction of its approximately $6.6 trillion balance sheet this month [1]

Core Viewpoint - The Federal Reserve's balance sheet is projected to reach $6.2 trillion, approximately 20% of GDP, with reserves expected to hit $2.9 trillion, while overnight reverse repurchase agreement balances are anticipated to remain at low levels [1] Group 1 - The Federal Reserve's System Open Market Account (SOMA) head indicated that market participants surveyed estimate the balance sheet size [1] - The projected reserves of the Federal Reserve are expected to reach $2.9 trillion [1] - The balance of overnight reverse repurchase agreements is expected to stay low [1]

Core Viewpoint - The scale of overnight reverse repurchase agreements by the Federal Reserve reached $138.283 billion on Friday [1] Group 1 - The usage of overnight reverse repurchase agreements indicates liquidity management strategies employed by the Federal Reserve [1]