Last week saw the magic of The Fed's "seasonal adjustments" turn a $66BN outflow into a $41BN deposit inflow for domestic banks. With money market fund inflows accelerating and usage of The Fed's emergency funding facility at a new record high, who knows what imaginative gifts the clever people at The Eccles Building will drop on us today.
Total bank deposits (on a seasonally-adjusted basis) plunged by $70BN last week to its lowest since May...
Source: Bloomberg
But, of course, non-seasonally-adjusted deposits saw inflows of $38BN...
Source: Bloomberg
Are bank deposits about to catch-down to their money-market-fund implied levels?
Source: Bloomberg
Large banks saw over $50BN deposits outflows (SA) (biggest since July) and Small Banks $15BN outflows (biggest since March)...
Source: Bloomberg
Large Bank deposits(SA) are at their lowest since April 2021 (and Small Bank deposits (SA) are at their lowest since July)...
Source: Bloomberg
The flip-flopping from last week's SA vs NSA flows to this week's SA vs NSA flows is risible..
Source: Bloomberg
On the other side of the ledger, loan volumes shrank for Small Banks (by $3BN) while Large Banks saw loan volumes increase by $2.5BN for basically no loan change on the week in the aggregate...
Source: Bloomberg
Finally, we note that Small Banks are leaking (accelerating) back down towards their 'reserve constraint'...
Source: Bloomberg
We leave you with one thought - in 6 months and counting, America's 'smaller' banks will need to find that $108-billion plus from somewhere as that is when the BTFP bailout program ends (theoretically).
Will regional bank balance sheets be stabilized by then? They better hope for a serious recession to smash yields back down (and TSY prices up).
