Nov 2025 $150B Liquidity Drain: RRP Depletion & Market Impact Analysis

This analysis is based on the SeekingAlpha report [1] warning of a $150B liquidity drain from Treasury settlements over Nov 25-Dec1, 2025. The drain includes $14B on Nov25, $52B (47B coupon +5B T-bill) on Nov28, and $83B coupon on Dec1 [2]. Key findings:

• RRP Depletion
  : Reverse repo (RRP) balance dropped from $328.26B (Nov26 [4]) to $7.56B (Nov28 [3]), a 97.7% decline, confirming the liquidity buffer is exhausted.
• Market Performance
  : The S&P500 gained +2.73% (Nov24-28 [0]) due to seasonal Thanksgiving strength [2], despite liquidity concerns. Volume declined by 57% on Nov28 (2.56B vs.6.04B Nov24 [0]) due to half-day trading.
• Sector Trends
  : Energy (+1.13% [0]) led gains, while Healthcare (-0.03% [0]) lagged.

1. Depleted Liquidity Buffer
   : The RRP facility’s near-total depletion removes a critical safety net—future Treasury settlements will directly draw from risk assets or bank reserves [3].
2. Seasonal Offset
   : Short-term seasonal strength can counter liquidity stress, but long-term risks remain unresolved.
3. Holiday Sensitivity
   : Holiday-shortened weeks amplify liquidity sensitivity, even if markets rise temporarily.

• Liquidity Risk
  : Depleted RRP means future settlements rely on risk assets or bank reserves, increasing downside potential [3].
• Volatility Risk
  : Low liquidity in holiday periods amplifies price swings from unexpected news [2].
• Fiscal Risk
  : Sustained Treasury issuance for deficit financing may lead to persistent liquidity stress [2].

Monitoring RRP balance trends (weekly Fed H.4.1 releases [4]) and upcoming settlement dates can help anticipate market liquidity shifts.

The Nov 2025 $150B liquidity drain event highlights the link between fiscal policy (Treasury issuance) and market liquidity. While seasonal factors offset short-term downside, the depleted RRP buffer signals elevated long-term liquidity risks. Investors should track settlement schedules, RRP balances, and economic data to manage exposure to future liquidity shocks.