The US Treasury’s liquidity has not drained, and reserves have climbed, easing concerns about potential credit constraints.

The Fed Treasury General Account has grown by $460 billion since early June.

Government borrowing usually decreases demand for the Fed’s overnight reverse repo program (ON RRP), which helps money market funds lend to the Fed.

Reserves rose from $58.5 billion to $3.22 trillion in the week ended July 19, while demand for the ON RRP facility fell $87.3 billion.

The risk of reserve scarcity has receded as more cash has left the RRP facility.

As the Fed reduces bond holdings by almost $100 billion a month, officials are tracking combined reserve and ON RRP balances to gain a better picture of sector liquidity.