US Banks Witness Further Deposit Outflows As Assets of Money-Market Fund Reach New Record High

Money Market Funds Inflows Continue to Rise

For the eighth time in the last nine weeks, money market funds have seen inflows of approximately $38.7BN. This has pushed the total Assets Under Management (AUM) to a new record high of $6.463TN.

Bank Deposits See Outflows for Third Consecutive Week

Non-seasonally-adjusted (NSA) bank deposits have seen outflows for the third consecutive week, amounting to -$18BN.

Seasonally-Adjusted Deposits Experience Increase

However, in a trend we have become familiar with, total seasonally-adjusted (SA) deposits increased by $18BN. This marks the sixth weekly increase in the past seven weeks.

Domestic Deposits Fall in Week Ending 9/25

Excluding foreign deposits, both SA and NSA domestic deposits witnessed a decrease in the week ending 9/25, with -$4.8BN and -$22.3BN respectively.

Large and Small Banks See Outflows

On a SA basis, large banks saw outflows of $3.2BN and small banks experienced outflows of $1.6BN. On an NSA basis, large banks saw $20.1BN in outflows and small banks just $2.2BN. Interestingly, while large banks saw outflows, their loan volumes increased by $7.3BN last week, while small banks saw loan volumes decrease by 3.5BN.

Bank Reserves at The Fed Fall As US Equities Hit New Record High

As US equities reached a new record high in market capitalization, bank reserves at The Federal Reserve fell to their lowest since March 2023.

Bottom Line

The recent trends in the financial sector, particularly the continued inflows into money market funds and the outflows from bank deposits, raise interesting questions about the current state of the economy and investor behavior. What are your thoughts on these developments? Do you think these trends will continue? Feel free to share this article with your friends and discuss it. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.