Money-market funds saw inflows for the 5th straight week (almost $40 billion this week) to a new record high of $5.57 trillion. That was the biggest weekly inflow in 6 weeks…
Source: Bloomberg
Both retail and institutional funds saw inflows ($15.6 BN and $24.1 BN respectively)…
Source: Bloomberg
The decoupling between money-market fund inflows and bank deposits continues…
Source: Bloomberg
After last week’s modest growth in The Fed’s balance sheet, it plunged by $62.5BN last week (the most since early April and second most since July 2020)
Source: Bloomberg
With regard to QT, The Fed sold down $42BN of its securities…
Source: Bloomberg
Usage of The Fed’s emergency bank lending facility (BTFP) rose by $378 million to a new record high of $107.2 BN…
Source: Bloomberg
The breakdown from The Fed’s H.4.1 table…
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Total securities held fell by $42BN (dominated by TSY selling)
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Discount Window increase $55MM to $1.966BN
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BTFP new record $107.2BN, up $0.3BN
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Other credit extensions (FDIC loans) down $3.8BN to $141.6BN
Is it time for US equity market caps to catch down to bank reserves at The Fed?
Source: Bloomberg
Finally, some food for thought, the last time yields were here and accelerating higher this fast, we saw the mini-banking crisis exposed a quarter later as reality hit…
Source: Bloomberg
Bearing in mind that in less than 7 months, the banks will have to fend on their own – absent the $100-billion-plus facility from The Fed – once wonders just where that magical balance sheet fix will come from? A collapse in yields as the economy enters depression? Or will The Fed just expand its balanced sheet again?
