{"id":1446381,"date":"2023-12-28T21:40:00","date_gmt":"2023-12-29T02:40:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1446381"},"modified":"2023-12-28T21:40:00","modified_gmt":"2023-12-29T02:40:00","slug":"bank-bailout-fund-usage-soars-to-another-record-high-as-2023-sees-greatest-annual-money-market-inflows-ever","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/bank-bailout-fund-usage-soars-to-another-record-high-as-2023-sees-greatest-annual-money-market-inflows-ever\/1446381\/","title":{"rendered":"Bank Bailout Fund Usage Soars To Another Record High As 2023 Sees Greatest Annual Money-Market Inflows Ever"},"content":{"rendered":"

Bank Bailout Fund Usage Soars To Another Record High As 2023 Sees Greatest Annual Money-Market Inflows Ever<\/span><\/p>\n

\n

After two weeks of outflows, money-market funds returned to inflows in the week ending 12\/27, adding $16.4BN to $5.89TN…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Which means 2023 saw the largest annual money-market inflow ever – a whopping $1.151TN.<\/strong> That is the seventh year in a row of annual MM inflows…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

But, with recession odds declining rapidly, are we about to see MM outflows accelerate?<\/strong><\/p>\n

<\/a><\/p>\n

Source: Goldman Sachs<\/em><\/p>\n

Retail money-market funds capped the year with yet another inflow (+$13.3BN) meaning there was only one weekly outflow from retail funds in 2023.<\/strong> Institutional funds saw a $3.4BN inflow also…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

In a breakdown for the week to Dec. 27,\u00a0government funds<\/strong> – which invest primarily in securities like Treasury bills, repurchase agreements and agency debt – saw assets rise to $4.81 trillion, an $18.9 billion gain<\/strong>.\u00a0<\/p>\n

Prime funds,<\/strong> which tend to invest in higher-risk assets such as commercial paper, meanwhile, saw assets fall to $951.4 billion, a $3.8 billion decrease.<\/strong><\/p>\n

\u201cThe big question is how overweight are investors in money markets,\u201d\u00a0<\/strong><\/em>Kristina Hooper, chief global market strategist at Invesco,\u00a0said\u00a0in a Bloomberg Television interview earlier this week.<\/p>\n

\u201cSome exposure makes sense. That\u2019s part of being diversified. But there is significant overweight on the part of some investors and I do think that starts to come out.\u201d <\/em><\/p>\n

Interestingly, bank deposits are rising rapidly in the last few weeks as are money-market funds…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Notably, with year-end liquidity needs growing, the exodus from The Fed’s reverse-repo facility has stalled (for now)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

The Fed’s balance sheet shrank by $11.3BN last week to its lowest level since March 2021…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Usage of The Fed’s bank bailout facility rose by another $4.5BN last week to a new record high of $136BN…<\/strong><\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

But Regional bank shares don’t care…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

The BTFP-Fed Arb continues to offer ‘free-money’ (and usage of the BTFP has risen by $26.7BN since the arb existed):<\/strong><\/p>\n

The rate on the Fed\u2019s Bank Term Funding Program – which allows banks and credit unions to borrow funds for up to one year, pledging US Treasuries and agency debt as collateral valued at par – is the one-year overnight index swap rate plus 10 basis points.<\/em><\/p>\n

That figure is currently 4.83%, down from 5.59% in September.<\/em><\/p>\n

For institutions that have an account at the Fed, they can borrow from the BTFP at 4.83% and park that at the central bank to earn 5.40% – the interest on reserve balances.<\/em><\/strong><\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

The 57bp spread is the widest level since the Fed introduced the facility<\/strong> to support a struggling banking system after the collapse of California\u2019s Silicon Valley Bank and Signature Bank in New York.<\/em><\/p>\n

Finally, equity market caps continue to soar after recoupling with bank reserves at The Fed (though the stalling in the drawdown of the RRP has slowed the expansion again this week in a bigger way)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

WTF are banks going to do when The Fed shuts down this ‘temporary’ bailout program in March?<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 12\/28\/2023 – 16:40<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/2023-sees-greatest-annual-money-market-inflows-ever<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Bank Bailout Fund Usage Soars To Another Record High As 2023 Sees Greatest Annual Money-Market Inflows Ever After two weeks of outflows, money-market funds returned…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1446381","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1446381","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1446381"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1446381\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1446381"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1446381"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1446381"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}