And while The Fed's balance sheet continues to contract, we do note that the pace of contraction has slowed significantly this year...

Source: Bloomberg
And at the same time, inflows to money-market funds continued to take total assets to fresh record highs...

Source: Bloomberg
...as banks saw deposits decline $48BN (SA) last week ($86BN in the last 3 weeks)...

Source: Bloomberg
On a non-seasonally-adjusted basis, total deposits fell $74BN in the week ending 2/21 (down $206BN in 2024)...

Source: Bloomberg
And, excluding foreign banks, domestic deposits dropped $46BN SA (Large Banks -$36BN, Small Banks -$10BN), and tumbled $69BN NSA (Large Banks -$62BN, Small Banks -$7BN)

Source: Bloomberg
On the other side of the ledger, there basically no activity at all in loans from small or large banks. Quite an odd print...

Source: Bloomberg
US equity market cap remains dramatically decoupled from bank reserves at The Fed. The last time it was this decoupled didn't end well...

Source: Bloomberg
And finally, as if you needed a reminder after this week's NYCB debacle - despite the rebound off the lows again this week in regional bank shares, which must mean everything is awesome, right? - the regional bank crisis is still very much alive as evidenced by the red line below (without The Fed's imminently expiring BTFP facility)...

Source: Bloomberg
...what else are big banks (green line) going to do with all that cash burning a hole in their pockets (although we do note a big cash drop at large banks - which includes NYCB, but this was the week before).
As one veteran Fed watcher remarked "this is such a clusterfuck... deposits should be $500BN lower"

Source: Bloomberg
The bottom line is - this looks a lot like a 'Small Bank' crisis. The last time this happened, the crisis sparked a sudden $300BN 'run' in small bank deposits (this time it's bigger!).
Is The Fed 'hoping' for a controlled bank-run this time - so as many small bank deposits are drained voluntarily, before they are drained all at once in a panic (and the Reverse Repo facility is empty, unable to provide any cushion)?
https://www.zerohedge.com/markets/us-bank-crisis-looms-deposit-outflows-accelerated-last-week-loan-volumes-stagnate
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