Subscribe to receive this daily commentary directly in your email
The Impacts Of Treasury Bill Issuance On The S&P 500
Independent macro and options research, published every trading day — $85/mo or $750/yr
Subscribe →For nearly three years, the equity market appeared to absorb significant Treasury bill issuance with little visible cost to bank reserves. The Federal Reserve’s Reverse Repo (RRP) facility — at one point holding over $2 trillion in money market cash — drained roughly dollar-for-dollar against new bill issuance. Money market funds rotated out of RRP and into bills, which appears to have absorbed a financing burden that might otherwise have pressured liquidity-sensitive assets.
That dynamic shifted in late October 2025. RRP balances are now near zero — down from a $2.5 trillion peak — and the month-end usage pattern that has historically refreshed the facility has effectively ceased. The chart below breaks down S&P 500 returns into three regimes defined by RRP balance levels. During the drain phase (June 2023 – October 2025), days with bill issuance settlement coincided with cumulative compounded returns of approximately +10%. Since the RRP buffer reached functional zero, those same Treasury Bill issuance settlement days have been associated with cumulative returns of approximately -13% over the subsequent six months.