Money-market funds saw inflows for the 5th straight week (almost $40 billion this week) to a new record high of $5.57 trillion. That was the biggest weekly inflow in 6 weeks...

Source: Bloomberg

Both retail and institutional funds saw inflows ($15.6 BN and $24.1 BN respectively)...

Source: Bloomberg

The decoupling between money-market fund inflows and bank deposits continues...

Source: Bloomberg

After last week's modest growth in The Fed's balance sheet, it plunged by $62.5BN last week (the most since early April and second most since July 2020)

Source: Bloomberg

With regard to QT, The Fed sold down $42BN of its securities...

Source: Bloomberg

Usage of The Fed's emergency bank lending facility (BTFP) rose by $378 million to a new record high of $107.2 BN...

Source: Bloomberg

The breakdown from The Fed's H.4.1 table...

• Total securities held fell by $42BN (dominated by TSY selling)
• Discount Window increase $55MM to $1.966BN
• BTFP new record $107.2BN, up $0.3BN
• Other credit extensions (FDIC loans) down $3.8BN to $141.6BN

Is it time for US equity market caps to catch down to bank reserves at The Fed?

Source: Bloomberg

Finally, some food for thought, the last time yields were here and accelerating higher this fast, we saw the mini-banking crisis exposed a quarter later as reality hit...

Source: Bloomberg

Bearing in mind that in less than 7 months, the banks will have to fend on their own - absent the $100-billion-plus facility from The Fed - once wonders just where that magical balance sheet fix will come from? A collapse in yields as the economy enters depression? Or will The Fed just expand its balanced sheet again?

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