"The Surprising Resilience of U.S. Markets Amidst Liquidity Drainage"
Despite a liquidity drain caused by heavy Treasury debt issuance, the U.S. stock market continues its rally, with the S&P 500 up 19% and the Nasdaq Composite up 37% this year. The liquidity drain, which was expected to impact financial markets, has not had a significant effect due to money-market funds allocating more cash to new Treasury bill issuance. The Federal Reserve's overnight reverse repo facility has seen a decrease in usage, falling to $1.7 trillion, while the Fed's balance sheet has contracted to about $8.3 trillion. BofA Global analysts expect the liquidity drain to continue until a recession occurs or scarcity hits banking reserves.