The Canary Just Died: Sudden Spike In SOFR Hints At Mounting Reserve Shortage, Early Restart Of QE

Several weeks ago, as the Fed's Overnight Reverse Repo tumbled below $900 billion for the first time since June 2021 amid a growing debate of where and when the Fed's reserve scarcity constraint will be hit, we warned that liquidity is rapidly approaching the reverse repo constraint level which could emerge as soon as the RRP facility dropped to $700 billion, at which point the market's all-important credit plumbing will start to crack

Reverse repo plunged to $865BN, down $65BN in one day, in one of the biggest liquidity injections in RRP history.
Also, fast approaching the $700BN reverse repo liquidity constraint level

— zerohedge (@zerohedge) November 24, 2023

We didn't have long to wait because just a few days later, on December 1 (and so just after the customary month-end window dressing period) when reverse repo tumbled to a fresh multi-year low of $765 billion...