Net Liquidity: Fed Balance Sheet Minus RRP and TGA

Core Formula

Net Liquidity = Fed Balance Sheet - RRP - TGA

Where RRP is the Reverse Repo Facility and TGA is the Treasury General Account. All three components are published by the Federal Reserve and US Treasury.

01 What It Measures

Net liquidity measures how much money is actively circulating in the US financial system after subtracting funds parked at the Federal Reserve or locked in government accounts.

The Fed's balance sheet adds money to the system. The RRP and TGA remove it. The difference tells you what's actually available to flow into risk assets like equities, credit, and crypto.

Macro analysts track this because one number replaces three separate data streams. AI agents and automated systems use it as a regime classification input, reading expansion as risk on and contraction as risk off.

02 The Three Components

Federal Reserve Balance Sheet

Total assets held by the Federal Reserve - primarily US Treasury securities and mortgage-backed securities. When the Fed buys assets (quantitative easing), the balance sheet expands and new dollars enter the banking system. When it lets assets mature without reinvestment (quantitative tightening), the balance sheet contracts.

The balance sheet peaked near $9 trillion in April 2022 after pandemic-era purchases. QT had reduced total assets by about $2.4 trillion when it ended in December 2025, and the balance sheet has grown since. Data is published weekly by the Federal Reserve and available through FRED series WALCL.

Reverse Repo Facility (RRP)

The Reverse Repo Facility lets money market funds park cash at the Fed overnight. Every dollar sitting in the RRP is a dollar removed from the broader financial system. High RRP balance means less liquidity available to markets.

The RRP peaked above $2.5 trillion in late 2022 and has since drawn down as Treasury bill issuance absorbed money market fund holdings. Many macro analysts tracked this RRP drainage through 2023-2024, since each dollar leaving the facility re-entered private markets.

Treasury General Account (TGA)

The US government's checking account at the Fed. When Treasury issues debt, money flows from the private sector into the TGA - reducing liquidity. When Treasury spends, money flows back out.

TGA balances swing based on tax collection cycles, debt ceiling dynamics, and spending patterns. Large TGA buildups before debt ceiling deadlines can drain hundreds of billions from markets. Rapid drawdowns after spending resolutions inject liquidity quickly.

03 Historical Liquidity Regimes

The correlation between net liquidity direction and Bitcoin price is not perfect, but the major regime shifts line up clearly enough that automated systems use liquidity direction as a first-pass filter before evaluating other signals.

Liquidity Regime (2020 - 2026)

04 How Agents Use This Data

AI trading agents and algorithmic systems use net liquidity as a regime filter. A sustained rise has historically coincided with periods where equities and crypto appreciate, and a sustained decline with drawdowns.

Backtesting frameworks use this to evaluate a signal in context: the same signal can behave differently when liquidity is expanding than when it is contracting. PreReason's Macro Liquidity briefing includes net liquidity alongside related macro indicators so agents get the full picture in a single API call.

PreReason API - net liquidity metric

get_metric net-liquidity, format json (MCP), as served on October 12, 2026
{
...
"metric": "net-liquidity",
"name": "net-liquidity",
"stored_name": "net_liquidity",
"display_name": "Net Liquidity",
"timestamp": "2026-10-09T00:00:00+00:00",
"interpretation": {
"signal": "at-trend",
"confidence": 54,
"confidence_label": "Medium",
"factors": {
"signal_strength": 35,
"trend_consistency": 100,
"percentile_score": 0,
"data_quality": 100
}
},
"trend": {
"direction": "flat",
"change_1d": 0,
"change_1d_available": true,
"change_7d": 1.28,
"change_7d_available": true,
"change_30d": 1.71,
"change_30d_available": true,
"change_90d": -1.58,
"change_90d_available": true,
"change_unit": "percent",
"momentum": "steady",
"momentum_description": "Stable with minimal directional movement",
"percentile": 87,
"percentile_label": "above-average growth",
"percentile_history_days": 359
},
"context": "Net liquidity at $5.87T: Fed total assets (Wednesday level, 2026-10-07) less the Treasury General Account (week average to 2026-10-07) and overnight reverse repo (daily, 2026-10-09); 7d +1.3% (flat, within ±2%), 30d +1.7%, 90d -1.6%.",
"source": "Calculated",
"display": "no",
"data_quality": {
"age_hours": 80.9,
"age_display": "3 days ago",
"stale": false,
"critical": false,
"status": "warning",
"expected_frequency": "weekly (fixed weekday release)",
"stalest_input": {
"metric": "rrp",
"as_of": "2026-10-09T00:00:00.000Z",
"age_hours": 80.9,
"status": "warning"
}
}
}

Inside the Macro Liquidity briefing (macro.liquidity, illustrative)

GET /api/context?briefing=macro.liquidity&format=markdown
# Liquidity Momentum
**Fed balance, TGA, RRP, and M2 direction tracking...**
*Generated: 2026-03-28T14:00:00Z*
### Net Liquidity [Neutral]
Net Liquidity $5.98T. Falling 0.4% over 30d (47th
percentile, near median). Momentum decelerating...
### Fed Balance Sheet [Neutral]
Fed Balance Sheet $6.82T. QT continues but pace has
slowed. Falling 0.3% over 30d...
### Treasury General Account [Neutral]
TGA $750B. Elevated after recent debt issuance.
Rising 3.2% over 30d...
### M2 Money Supply [Neutral]
M2 $22.4T. Rising slowly month-over-month. Broad money
supply expanding at a moderate pace...

Illustrative output. The metric endpoint returns net liquidity as a number with trend data. The briefing returns each component as a labeled section with signal, context, and trend direction.

The three components update on different schedules. The Fed balance sheet and TGA both come from the weekly H.4.1 release (Thursday). The RRP updates daily from the NY Fed's operations report. PreReason computes net liquidity daily using the most recent value of each component.

05 Data Sources and Update Cadence

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