Fed F**kery Turns $37BN ‘Unadjusted’ Bank Deposit OUTFLOW Into $126BN INFLOW

Money market funds added $23.6BN in assets last week, pushing the total funds under management back above $6 Trillion – still well off the highs (as some tax-related withdrawals remain lost)…

Source: Bloomberg

Both retail and institutional funds saw inflows last week…

Source: Bloomberg

Amid all the talk of tapering, The Fed’s balance sheet plunged $40BN last week to its lowest since Jan 2021 (with QT continuing at around $35BN)…

Source: Bloomberg

The Fed’s now-expired Bank Bailout fund (BTFP) saw a small decrease of just $1.375BN – inching closer to erasing all the arb-driven surge in demand for the facility, but leaving a whopping $12BN left out there filling holes in bank balance sheets…

Source: Bloomberg

And after last week’s almost unprecedented outflows, total bank deposits (seasonally-adjusted) rose by a huge $129BN to $17.58TN – that was the biggest rise in deposits since March 2021…

Source: Bloomberg

But, by the magical power of Federal Reserve ‘science’, on a non-seasonally-adjusted basis, total bank deposits dropped $24BN…

Source: Bloomberg

Excluding foreign deposits, the picture was just as farcical with seasonally-adjusted domestic deposits rising $126BN (Large banks +$111BN – biggest since April 2020, Small banks +$15BN), while non-seasonally-adjusted domestic deposits tumbled $36.7BN (Large banks -$7.2BN, Small banks -$29.5BN)…

Source: Bloomberg

Don’t try to make sense of the fact that the so-called seasonally-adjusted levels are more noisy than the unadjusted… … it’s PhD-based ‘science’ stuff, you’d never understand!

For the third week in a row, total loan volumes rose (by $5.8BN) with large bank volumes rising $4.2BN and small bank volumes rising $1.6BN

Source: Bloomberg

Finally, bank reserves at The Fed continues to contract, while US equity market cap remains dramatically decoupled…

Source: Bloomberg

Is Powell’s acquiescence to a bigger, sooner ‘QT taper’ (in the face of not-under-control inflation) to soften the blow when this crocodile mouth snaps shut.