US Deposit Outflows Accelerated Last Week, Led By Small Banks
After yesterday’s continuing surge on flows INTO money market funds and increase in the use of The Fed’s bank bailout facilities, expectations were for more deposit outflows from US commercial banks (despite Western Alliance’s comments which sparked a melt-up in regional bank shares this week.
However, Treasury Secretary Yellen spoiled the party somewhat today by warning (reportedly) that the market should expect ‘more bank mergers’ (i.e. failures)…
And so, according to the latest H8 report from The Fed, on a seasonally-adjusted basis, total US Commercial Bank deposits fell by $26.4 billion during the week ended 5/10 – the third straight week…
Source: Bloomberg
On a seasonally adjusted basis, US commercial bank deposits (ex-large time deposits) decreased $20.8bn last week (during the week-ending 5/10), for the fifth straight weekly outflow. That is the lowest since March 2021…
Source: Bloomberg
On a non-seasonally-adjusted basis, US commercial bank deposits (ex-large time deposits) dropped $50.26 billion (after jumping $63.8 billion) the prior week.
And judging by yesterday’s money market inflows, the deposit outflows continued this week (remember, deposit data is lagged a week to money market and Fed balance sheet data), despite reassurances from WAL…
Source: Bloomberg
On a seasonally-adjusted basis (ex large time deposits), Large, Small, and Foreign banks all saw outflows last week. Small bank deposits are at their lowest since May 2021…
Source: Bloomberg
This is the 5th straight week of Small Bank outflows and Small Banks saw the largest outflows…
- Large Banks -$7.49 billion SA (-$36.5 billion NSA)
- Small Banks -$8.742 billion SA (-$12.5 billion NSA)
- Foreign Banks -$4.627 billion SA (-$1.2 billion NSA)
Source: Bloomberg
Including large time deposits, the breakdown is as follows:
- Large banks -$21.6BN
- Small banks -$2.7BN
- Foreign Banks -$2.1BN
Jim Bianco points out an interesting fact in today’s data – ‘large time deposits’ saw their first outflow since last October…not a good sign as Jim points out
2/4
The twist this week is large time deposits, aka Jumbo CDs, also saw an OUTFLOW this week.
The first such outflow since last October.
This is how banks competed with money market accounts, and even this reversed.
Ok, it is only one week, but it is surprising, nevertheless pic.twitter.com/LuFrWuQsyJ
— Jim Bianco biancoresearch.eth (@biancoresearch) May 19, 2023
Finally, after adjusting for all the revisions (which are now an every week occurrence), what sticks out to us is that the last 5 weeks have seen $379 billion in NSA bank outflows, while SA the number is an outflow of only $171 billion.