Repayment of BTFP loans increases, yet $125 billion still outstanding; banking crisis looms as Fed Discount Window activity surges.

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Repayment of BTFP loans increased slightly last week, but there’s still around $125 billion outstanding. Weekly data on assets and liabilities for commercial banks indicate a significant gap in their balance sheets, suggesting the banking crisis isn’t over. The Fed Discount Window saw a 27% increase to $6.79 billion this week, with a focus on smaller banks and their strategies for solvency. Amidst other developments like Powell’s stance on inflation, it’s noteworthy that loans from the discount window have hit their highest level in a year. While not at crisis levels yet, the “lender of last resort” has been more active since the BTFP closed. Additionally, mortgage rates have risen for the fifth consecutive week, with the 30-year fixed rate at 7.42%, signaling potential challenges ahead in the housing market.


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