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 DollarLiquidity scoring model, TGA carries a 12% weight and ONRRP carries a 10% weight. The slightly higher weight for TGA reflects its more direct transmission mechanism — Treasury spending directly adds to bank deposits and reserves, while ONRRP drainage is a more indirect flow.

Both indicators use a "higher_worse" direction flag: rising values indicate tightening conditions. The z-score normalization ensures that both contribute proportionally to the composite liquidity score regardless of their different absolute scales ($100s of billions for TGA vs. $1+ trillion for ONRRP at peak).

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 highest-conviction liquidity signals come from alignment: both TGA falling and ONRRP draining simultaneously. When they diverge, the signal is weaker and patience is warranted.

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.