Money Market Funds See Biggest Inflows Since COVID As Fed F**kery Turns Huge Bank Deposit Outflows Into Inflow

Money Market funds saw a massive $121BN inflow last week – the biggest since the COVID lockdown crisis (and bigger than during the SVB collapse) – lifting total AUM to a new record high of $6.424 TN…

Source: Bloomberg

The tsunami of cash came primarily from institutional funds (+$113BN) in the week following The Fed rate-cut and right before the Chinese unleashed their own cash tsunami.

At the same time, US banks saw deposits (seasonally-adjusted) rise by $44.2BN in the week ending 9/18, raising total deposits to the highest since Dec 2022…

Source: Bloomberg

BUT, on a non-seasonally-adjusted basis, total bank deposits fell $53BN in the week ending 9/18…

Source: Bloomberg

But here comes the big Fed fuckery…

Excluding foreign deposits, US Bank deposits (on a non-seasonally-adjusted) tumbled $65.8BN while on a SA-basis, deposits rose $35.5BN… (a $110BN spread out of nowhere)…

Source: Bloomberg

Breaking it down, on an SA basis large banks saw $24.9BN inflows and small banks $10.6BN inflows. On an NSA basis, large banks suffered a $45.8BN deposits outflow and small banks a $20BN outflow.

Once again we ask – what exactly is a seasonally-adjusted deposit?

On the other side of the ledger, loan volumes increased for the 3rd straight week…

Source: Bloomberg

Finally, we note that bank reserves at The Fed tumbled to their lowest since October 2023 this week as US equity market capitalization hit a new record high…

Source: Bloomberg

That’s quite a decoupling from a historically tight relationship.