Money-Market Fund Assets Hit New Record High As Fed’s Bank Bailout Fund Set To Expire

Despite soaring stocks, money-market fund assets rose to a fresh record high for the second straight week, adding $19BN to $6.08TN (and almost $70BN in two weeks)…

Source: Bloomberg

But, but, but, ‘money on the sidelines’ and stuff?

In a breakdown for the week to March 6, government funds – which invest primarily in securities like Treasury bills, repurchase agreements and agency debt – saw assets rise to $4.9 trillion, a $21.6 billion increase. 

Prime funds, which tend to invest in higher-risk assets such as commercial paper, meanwhile, saw assets fall to $1.02 trillion, a $3.6 billion drop, driven by an exodus from the institutional side.

Institutional funds saw a modest $3.6BN inflow while Retail funds saw $15.1BN inflow…

Source: Bloomberg

The Fed’s balance sheet shrank by $39BN last week to its lowest since Feb 2021…

Source: Bloomberg

QT shows no signs of tapering yet with $29.6BN in securities released last week, to the lowest since March 2021, just above $7TN…

Source: Bloomberg

The Fed’s Reverse Repo facility saw further liquidity drawn-down, plunging fast very recently, on target for a March meeting with the x-axis…

Source: Bloomberg

Bank reserves at The Fed were flat on the week with equity market cap as dramatically decoupled as it was in July of last year…

Source: Bloomberg

Finally, The Fed’s bank bailout facility (BTFP) is set to expire in the next week (but bear in mind these are all one-year term loans). It ticked up by $548MM last week holding around the $164BN level…

Source: Bloomberg

Powell today said he was trying to destigmatize the discount window (because that is where all this crap is going to end up)…

Reminder, bonds are trading higher in yield, lower in price, since the SVB crisis (which means what for the banks holdings?)