After last week’s massive non-seasonally-adjusted deposit outflows (and shrinking Fed balance sheet), all eyes will be back on The Fed’s H.4.1. report this evening for signs that the regional banking crisis is accelerating even further (as PacWest’s statement and regional bank shares suggest).
The answer is not a good sign for the bulls as Money Market Funds saw $18.3 billion of INFLOWS, pushing the aggregate to a record high of $5.328 trillion. That is almost $120 billion of inflows in the last three weeks…
Source: Bloomberg
Retail funds saw over $12 billion in inflows while institutional was just $6 billion…
Source: Bloomberg
This surge in money market fund inflows strongly suggests tomorrow’s H8 deposit report will show the bank run is accelerating…
Source: Bloomberg
However, the most anticipated financial update of the week – the infamous H.4.1. showed the world’s most important balance sheet shrank for the 7th straight week last week, but only by a tiny $977 million, notably more than last week’s tumble (helped by a $43bn QT)…
Source: Bloomberg
The Total Securities held outright on The Fed balance sheet actually increased (so much for QT) by $461 million…
Source: Bloomberg
The total size of the Fed’s backstopping facilities remained extremely high at around $305.4 billion…
Source: Bloomberg
But, more problematically, the demand for the Bank Term Funding Program surged by $8 billion to $83.1 billion – a new high…
Source: Bloomberg
The drop in the discount window usage corresponds to the rise in the ‘Other Credit Extensions’ which looks like the loan to backstop the FRC deal.
Away from the FDIC loans, The Fed has a total of $92.4 billion of loans outstanding to financial institutions through two backstop lending facilities in the week through May 10, dramatically higher than the $81.1 billion the previous week.
Tomorrow we get the big one – more answers after the bell when The Fed releases its H8 report on bank deposit flows and whether the seasonal-adjustments are total bullshit or not.
Tyler Durden
Thu, 05/11/2023 – 16:40
