Small US Banks Suffer Biggest Deposit Outflows Since SVB Crisis, Money-Market Inflows Soar

Last week noticed the magic of The Fed’s “seasonal adjustments” flip a $66BN outflow right into a $41BN deposit influx for home banks. With cash market fund inflows accelerating and utilization of The Fed’s emergency funding facility at a brand new document excessive, who is aware of what imaginative items the intelligent individuals at The Eccles Building will drop on us at the moment.

Total financial institution deposits (on a seasonally-adjusted foundation) plunged by $70BN final week to its lowest since May…

Source: Bloomberg

But, in fact, non-seasonally-adjusted deposits noticed inflows of $38BN…

Source: Bloomberg

Are financial institution deposits about to catch-down to their money-market-fund implied ranges?

Source: Bloomberg

Large banks noticed over $50BN deposits outflows (SA) (greatest since July) and Small Banks $15BN outflows (greatest since March)…

Source: Bloomberg

Large Bank deposits(SA) are at their lowest since April 2021 (and Small Bank deposits (SA) are at their lowest since July)…

Source: Bloomberg

The flip-flopping from final week’s SA vs NSA flows to this week’s SA vs NSA flows is risible..

Source: Bloomberg

On the opposite aspect of the ledger, mortgage volumes shrank for Small Banks (by $3BN) whereas Large Banks noticed mortgage volumes improve by $2.5BN for mainly no mortgage change on the week within the mixture…

Source: Bloomberg

Finally, we notice that Small Banks are leaking (accelerating) again down in the direction of their ‘reserve constraint’…

Source: Bloomberg

We depart you with one thought – in 6 months and counting, America’s ‘smaller’ banks might want to discover that $108-billion plus from someplace as that’s when the BTFP bailout program ends (theoretically).

Will regional financial institution steadiness sheets be stabilized by then? They higher hope for a severe recession to smash yields again down (and TSY costs up).