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Bank Loan Volumes Plunge Despite Huge Deposit Inflows, Fed Rescue Fund Usage Surges To New Record High
BY TYLER DURDEN
FRIDAY, NOV 10, 2023 – 04:40 PM
Regional bank stocks tumbled this week (in the face of market strength) amid a surge to new record highs for bank’s usage of The Fed’s emergency funding facility, and new inflows sending money-market fund assets to record highs.
Don’t show Bill Gross this chart…
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Source: Bloomberg
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So, with emergency fund usage soaring (and regulators set to force banks to The Fed instead of the FLHB for cheap funds), what shenanigans did The Fed get up to this week in ‘adjusting’ bank deposit dats (reminder of last week’s $51BN inflow magically created from a $33BN outflow)…
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On a seasonally-adjusted basis, total bank deposits rose by $30.5BN last week…
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Source: Bloomberg
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However, drum roll please, non-seasonally-adjusted total bank deposits exploded $155BN higher (to the highest since April)…
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Source: Bloomberg
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And so for the second week in a row, Bank deposits and Money-Market funds saw ‘inflows’…
Source: Bloomberg
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Removing foreign bank deposit flows, the picture for domestic bank deposits gets even more wild. A $13BN outflow NSA from foreign banks means domestic banks saw a massive $169BN inflow NSA last week (+$141.9BN Large banks, +$27.6BN Small Banks). A modest $6.8BN outflow SA from foreign banks means that domestic banks saw a $37BN inflow SA (+$42.3BN inflows for Large Banks but $6.1BN outflows for Small Banks)
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Source: Bloomberg
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That massive divergence smashed the total SA and NSA deposit outflows since the SVB crisis back towards each other (down $191BN and $226BN respectively)…
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Source: Bloomberg
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But here’s the fun bit – amid that massive influx of deposits – loan volumes plunges last week for Large and Small banks (-$5.4BN and -$22.6BN respectively)…
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Source: Bloomberg
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Finally, the key warning sign continues to trend ominously lower (Small Banks’ reserve constraint), supported above the critical level by The Fed’s emergency funds (for now)…
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Source: Bloomberg
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As the green line shows, without The Fed’s help, the crisis is back (and large bank cash needs a home – blue line – like picking up a small bank from the FDIC).
Source: Zero Hedge
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