The Impacts Of Treasury Bill Issuance On The S&P 500

The Impacts Of Treasury Bill Issuance On The S&P 500

The reported data breaks down into three distinct liquidity regimes, and the message is becoming increasingly clear: the buffer that once insulated markets from Treasury funding pressures is gone, and the drain is now hitting markets directly.

From roughly June 2023 through October 2025, the reverse repo facility acted as a shock absorber for Treasury bill issuance. As the Treasury increased the supply of bills, money market funds steadily rotated cash out of the RRP and into Treasury bills. That shift effectively funded issuance without materially reducing reserve balances or tightening broader financial conditions. In other words, the market was able to absorb a large increase in bill supply with relatively little visible stress.