After the prior week's big inflow, money-market funds saw $20.3 billion of OUTFLOWS in the last week, still hovering very close to record highs...

The outflow was dominated by institutional funds (pulling down $25.6 billion, presumably to buy NVDA calls), while retail funds saw the 12th straight weekly inflow...

That was the biggest weekly outflow since April 19th (tax-withdrawals), but money-market assets and bank deposits remain decoupled over the last few weeks...

The Fed's balance sheet remains below the pre-SVB spike, shrinking only $1.4 billion last week, but back at the lowest level since Aug 2021

As far as QT is concerned, it slowed dramatically last week with The Fed selling a mere $2.1 billion...

Usage of The Fed's Bank Term Funding Program facility increased on the week...

The breakdown from&nbsp;<a href="https://www.federalreserve.gov/releases/h41/">The Fed's H.4.1 table</a>...

And the US equity market continues to decouple higher from the declining trend in bank reserves at The Fed...

Finally, after all the big banks passed the stress test with flying colors, we remind readers that banks have 8 months left under the original 12-month BTFP Fed bailout program to find a way to stabilize their balance sheets.

Not only have they failed to do so, usage of the BTFP facility remains near record highs. On the bright side, yields are falling, so MTM losses don't look so bad.

...US equities and bank reserves continue to diverge...
{ai:summary}Money-market funds experienced significant outflows of $20.3 billion, mainly driven by institutional funds, while retail funds continued to see weekly inflows. This was the largest outflow since April 19th. Despite this, money-market assets and bank deposits have remained disconnected in recent weeks. The Federal Reserve's balance sheet decreased by $1.4 billion, reaching its lowest level since August 2021. The Fed's Bank Term Funding Program facility usage increased, while other credit extensions decreased. US equity markets continue to rise despite the declining trend in bank reserves. Although big banks passed stress tests, they have not been able to stabilize their balance sheets within the time frame given by the Fed bailout program. However, falling yields have alleviated some mark-to-market losses. #economy

Retail Money-Market Inflows Continue As Fed Bank Bailout Facility Usage Rises Again

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