This liquidity strain might prompt banks to tighten lending, potentially making it more challenging for individuals and businesses to access credit.
A record $870 billion of deposits have left banks over the last 18 months.
This is the highest deposit flight since The Great Depression. The UAW strike, student loan payments & government employees furloughed during a shutdown will make this liquidity situation worse. t.co/YnlzAWEzfU pic.twitter.com/Q0Z0sFzt8F
— Financelot (@FinanceLancelot) October 1, 2023
Unrealized losses on investment securities have skyrocketed recently
Recently, unrealized losses accounted for 33% of all bank equity capital.
This is a very important trend to watch into 2024.
Follow us @KobeissiLetter for real time analysis as this develops. pic.twitter.com/2WocDoJFJn
— The Kobeissi Letter (@KobeissiLetter) October 1, 2023
I cannot stress this enough:
The escalating risk from the global destruction in collateral value of fixed-income securities in a highly levered economy is profoundly concerning.
The very individuals who previously dismissed the lagging impact of falling bond prices within the… pic.twitter.com/JR7PGPADOg
— Otavio (Tavi) Costa (@TaviCosta) October 1, 2023
"The Fed should stop," says billionaire Barry Sternlicht. "What they're injuring is the balance sheet of the United States. The economy is going to slow. The regional banks do not have money." pic.twitter.com/lFKopsJlNr
— Win Smart, CFA (@WinfieldSmart) September 30, 2023
The US Bond Market has now been in a drawdown for 38 months, by far the longest bond bear market in history. pic.twitter.com/MOznPejse7
— Charlie Bilello (@charliebilello) October 1, 2023
Record liquidation volume in the t-bond market this week as the global bond market goes totally bidless.
CBs will abandon their inflation fight when things start to break. By which, I mean every thing.
By that time, stock gamblers will be buried. pic.twitter.com/nMXn6TpsPd
— Mac10 (@SuburbanDrone) September 30, 2023
Banks’ Ongoing Demand for Fed’s Emergency Funds at Near-Record Level
US money market funds saw a $6.3BN inflow this week, nearing record highs after a previous outflow. Retail funds increased by $7.8BN, but institutional funds declined by $1.5BN. The Fed’s balance sheet shrank by $22BN, its smallest since June 2021. The emergency funding facility use remains at a high of $108BN. Concerns grow as banks might face a $108BN deficit soon, possibly leading to prolonged use of the “emergency” facility in an election year.