Banks’ Use Of Fed’s Emergency Funds Hits New Record High; Retail Money-Market Fund Inflows Surge

Money-market funds saw a de-minimus $1.6BN outflow last week, still hovering near record highs at $5.7TN…

Source: Bloomberg

But, once again, retail funds saw inflows ($11.5BN) – no outflows since April – while institutional funds saw $13BN outflows…

Source: Bloomberg

Last week’s mysterious surge in bank deposits leaves the spread to money-market funds back at record wides…

Source: Bloomberg

The Fed’s balance sheet shrank by a modest $3.7BN last week

Source: Bloomberg

The Fed’s QT program slowed dramatically last week with just a $1.9BN decline…

Source: Bloomberg

Usage of The Fed’s emergency funding facility rose to a new record over $109BN… this week saw the biggest jump in the BTFP since July.

Source: Bloomberg

Fed balance sheet weekly change:

• Discount Window drops by $200MM to $2.6BN

• BTFP up $1.2BN to new record $108.9BN

• FDIC loans (new credit extensions) down $5.5BN to $58.3BN

And finally, as we head into bank earnings tomorrow, a quick reminder…

Source: Bloomberg

That’s a $109BN hole in their balance sheets that needs to be filled by next March.

And given the recent carnage in bonds…

Source: Bloomberg

…and it could be much worse.