Money-Market Fund Assets Crash 'Most Since Lehman' As Bank Deposits Rose Last Week
$99BN outflows! ...tax-extension deadline payments... or we're in trouble!
Money-market funds experienced the largest weekly outflows since Lehman (Q3 of 2008), plummeting $99BN...
Source: Bloomberg
Retail funds also saw an inflow )...
Source: Bloomberg
This is most likely due to the tax extension deadlines. If not, then something very serious has happened.
Total bank deposits, on a seasonally adjusted basis, fell for the second consecutive week (-$$8.7BN )...
Source: Bloomberg
Non-seasonally-adjusted, total deposits saw inflows for the 3rd week in a row (+$20.6BN)...
Source: Bloomberg
Is it the beginning of a major shift... or are these just one-off tax payments?
Source: Bloomberg
Deposits were received by both SA and NSA banks on a domestic basis, excluding deposits from foreign banks.
Source: Bloomberg
The difference between SA and NSA deposits outflows has been reduced to only $38BN since SVB (the total outflows is still over $200BN )...
Source: Bloomberg
Bans, on the other hand, increased their lending volume modestly last week after two weeks of shrinkage.
Source: Bloomberg
Last week, the Fed's balance sheet shrank around $19BN.
The use of the emergency funding facility by banks is still at record levels, around $109BN.
...
Source: Bloomberg
It appears that the US equity market and bank reserves at The Fed are convergent again.
Source: Bloomberg
The Fed's Emergency Funds (for now) are keeping the key warning indicator (Small Banks Reserve Constraint) above the critical level.
Source: Bloomberg
Above, large bank cash is surging. (As money-market funds outflows are moving?) Is it time to sacrifice yet another small bank?
Source: Bloomberg
If you were wondering why regional banks have been beaten like baby seals this week, wonder no longer.
Source: Bloomberg
Their balance sheets have a hole of at least $109BN that must be filled by the end of March...
...( (and good luck with the rates rising)
Tl;dr:...
QT shrinks Fed BS. - Commercial bank deposits will drop as Fed BS shrinks.
- Small bank deposits are forced to fall because deposits (especially in small banks) will not drop. Normally, they would have been reallocated for risk but the high rates make this unattractive.
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