Here are 3 Ways to Track the Deposit Flight
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The deposit flight continues even if the Fed and the US Treasury try to tell you otherwise currently.
We receive a bunch of questions on how to track deposits on a running basis since this is THE key question for global macro in coming months.
We track the deposit movements in the following three ways.
1) Daily ON RRP usage. If the ON RRP usage is UP without an explanation driven by the T-bills calendar, it is likely a hint that money market funds have seen inflows (due to a continued deposit flight).
2) The weekly money market funds data will ultimately reveal whether net inflows have continued (released every Thursday)
3) Weekly data on the lending in the new BTFB program from the Fed, which is designed to allow banks to use their bond books at par to cover deposit claims (released every Thursday)
The ON RRP facility has seen an inflow of almost $200bn over the past 72 hours, partly driven by the maturity of the $171bn 3m T-bill on Wednesday and partly by deposit flights.
It is hence our assessment that the deposit flight has NOT stabilized in contrast to what the Fed communicated on Wednesday. The Fed rather made matters worse.
We got the latest set of data on the Fed balance sheet and money market flows yesterday and they do not look pretty. We track this daily at Steno Research to keep our clients posted on the developments.
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