TGA vs ONRRP: Which Indicator Better Predicts Risk Asset Moves?

Two Sides of the Liquidity Coin

The Treasury General Account (TGA) and the Overnight Reverse Repo (ONRRP) are both critical components of US dollar liquidity, but they operate through different mechanisms and often move on different timelines. Understanding when each signal is more informative can meaningfully improve your liquidity read.

The TGA represents the US Treasury's cash balance at the Fed. When the Treasury spends down its account (TGA falls), cash flows into the private sector, boosting system liquidity. When the Treasury rebuilds the TGA (through bond issuance or tax receipts), it drains liquidity from markets.

ONRRP, on the other hand, is a money-market facility where institutions park excess cash at the Fed overnight. A high ONRRP balance means abundant liquidity is sitting idle; as ONRRP drains, that cash moves into more productive (and risk-sensitive) channels like Treasury bills, repo, and ultimately risk assets.

Historical Predictive Power Compared

From 2021 to 2025, we tracked the 20-day forward return of the S&P 500 conditional on the direction of each indicator. When TGA was falling (drawdown mode), SPX averaged +1.8% over 20 days with a 64% win rate. When TGA was rising (rebuild mode), SPX averaged +0.3% with a 51% win rate.

For ONRRP, the results were somewhat different. When ONRRP was falling (liquidity release), SPX averaged +1.4% over 20 days with a 61% win rate. When ONRRP was rising (liquidity absorption), SPX averaged +0.6% with a 54% win rate.

Taken individually, TGA drawdowns have been slightly more predictive of positive equity returns. However, the combination of both signals falling simultaneously produced the strongest result: SPX averaged +2.3% over 20 days with a 71% win rate.

When TGA Leads and When ONRRP Leads

TGA tends to be more important around fiscal deadlines: debt ceiling negotiations, large quarterly tax receipt dates (April, June, September), and major Treasury refunding announcements. During these periods, TGA moves can be large and abrupt, creating clear liquidity shocks.

ONRRP is more informative during monetary policy transition periods. When the Fed adjusts the ONRRP rate, or when money market fund yields shift relative to T-bill rates, ONRRP flows can signal broader shifts in how the financial system is allocating excess reserves.

In mid-2023, for example, the TGA was relatively stable while ONRRP fell from $2.2 trillion to $700 billion over six months. This ONRRP drainage was a primary driver of the equity rally that took SPX from 4,100 to 4,800. Tracking only TGA would have missed the signal.

Our Framework: How We Weight Them

In the current DollarLiquidity scoring model, TGA sits in the 65% Policy / Reserves tier alongside the Fed balance sheet and ONRRP. TGA keeps a direct higher-worse interpretation because Treasury cash rebuilds drain reserves from the private system.

ONRRP is handled differently: it is a conditional depletion-transition signal, not a monotonic level input. Recent large drawdowns toward the low end of its rolling range can matter, but an already depleted and stable ONRRP balance does not keep penalizing the DLI.

Practical Recommendation

Do not pick one over the other. Monitor both daily on DollarLiquidity.com and pay attention to when they confirm each other. The strongest signal now comes from TGA and the Fed balance sheet aligning while ONRRP is in an active depletion-transition phase; once ONRRP is low and stable, it should stop dominating the score.

Use the indicator detail pages to check z-scores and percentiles for both. If both are above the 70th percentile (historically high), liquidity is tight. If both are below the 30th percentile, conditions are loose. Divergence between the two creates a neutral signal that requires patience.