The eagerly awaited release of the FOMC minutes revealed little, but two potential nuggets were uncovered and we will watch to see if they turn into valuable assets. The first was the discussion of the FIXED-RATE, FULL-ALLOTMENT OVERNIGHT REVERSE REPURCHASE AGREEMENT (also known as the O/N RRP). This is a very sophisticated monetary tool that the Fed hopes to utilize to resolve the “FORWARD PROBLEM” of excess reserves in the banking system. The System Open Market Account (SOMA) has been testing the O/N RPP since September to ensure that SOMA can handle the use of the facility as an active tool of policy, possibly utilizing it as the workhorse of the issue of EXCESS RESERVES after the massive Fed QE programs. In quoting from the text: “The proposed increase in caps was intended to test the Desk’s ability to manage somewhat larger operational flows and to provide additional information about the potential usefulness of O/N RPP operations to affect market interest rates when doing so becomes appropriate.” This is an issue that will prove market moving on a regular basis as the operational flows grow in size. (I will cover this in-depth in another piece).