US Domestic Deposits Tumble $60BN As Small Bank Loan Volumes Shrank Most Since SVB

Money-market funds saw a small outflow last week (surprisingly small given how close to Tax-Day we are), leaving them still near record highs over $6 Trillion (and the trend of increased deposits at banks has been accelerating)…

Source: Bloomberg

Interestingly, amid all the talk of tapering QT, The Fed balance sheet was basically unchanged last week (-$1.4BN)…

Source: Bloomberg

…as The Fed’s (now expired) bank bailout facility saw another (the fourth) weekly decline (-$4BN), erasing much of the ‘arb-driven flows’ (blue shaded region) but leaving most of the ‘oh-shit-we-have-hole-the-size-of-France-in-our-balance-sheet’ flows still there ($126BN!!)….

Source: Bloomberg

Meanwhile, at those banks, total seasonally-adjusted deposits fell by $63.8BN last week – after rising for five straight weeks. That was the biggest drop since October.

Source: Bloomberg

Now before you start on “well, this is tax-driven”, we remind you these are ‘seasonally-adjusted’ data – so unless Tax Day changed suddenly, this is a notable decline (also remember this data is lagged by a week)…

Source: Bloomberg

On a non-seasonally-adjusted basis, deposits rose by a modest $16BN to their highest level since before the SVB crisis…

Source: Bloomberg

Excluding foreign deposits, Domestic deposits fell $70BN SA last week – the biggest weekly drop since October (Large banks -$67BN, Small banks -$3BN) while on an NSA basis, domestic deposits rose $12BN (Large banks -$6.8BN, Small banks +$18.8BN)…

Source: Bloomberg

Loan volumes shrank significantly last week with Small Banks seeing volumes tumble $12BN – the most since the SVB crisis. Large banks also saw loan volumes shrink, by $2.8BN…

Source: Bloomberg

Bank reserves picked up last week – after diving the prior week – but still remain hugely divergent from US equity market cap…

Source: Bloomberg

Again we ask, which happens first? Banks start piling reserves back in or stocks collapse?