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Tuesday, April 16, 2024

Money-Market Fund Assets Soar $100BN In 3 Weeks As Fed’s Bank Bailout Facility Expires

Despite soaring stocks, money-market fund assets soared to yet another fresh record high for the third straight week, adding $31BN to $6.11TN (over $100BN in three weeks)…

Source: Bloomberg

But, but, but, ‘money on the sidelines’ and stuff?

In a breakdown for the week to March 13, government funds – which invest primarily in securities like Treasury bills, repurchase agreements and agency debt – saw assets rise to $4.97 trillion, a $34.3 billion increase. 

Prime funds, which tend to invest in higher-risk assets such as commercial paper, meanwhile, saw assets fall to $1.016 trillion, a $3.33 billion drop, driven by an exodus from the institutional side.

Institutional funds saw a large $23.5BN inflow while Retail funds saw $7.8BN inflow…

Source: Bloomberg

The Fed’s balance sheet expanded last week by $3.1BN (the biggest weekly expansions since mid-January)…

Source: Bloomberg

QT continued but at a much more glacial pace, down just $2.85BN last week…

Source: Bloomberg

The Fed’s Reverse Repo facility has – for now – seen liquidity withdrawals stabilize a bit…

Source: Bloomberg

Bank reserves at The Fed were flat on the week with equity market cap as dramatically decoupled as it was in July of last year…

Source: Bloomberg

Finally, the bell has finally tolled on The Fed’s bank bailout facility (BTFP) which made its last (1-year term) loan on March 11.

The final week of the facility saw it increase by over $3BN to $167BN.

$167BN of loans remain on this facility and those loans will start to mature now – the next four weeks will see $79BN of those loans mature and banks forced to secure other funds to fill that gap…

Source: Bloomberg

So now we watch the Discount Window for signs of distress in the banking system as they are forced to source new funds.

This post was originally published on this site

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