US Banks Suffer Biggest Weekly Deposit Outflow Since SVB Crisis

After the massive deposit inflows the prior week, US banks saw total deposits plunge in the week-ending 10/09 (latest data released today), down a stunning $69BN (on a seasonally-adjusted basis), erasing the prior two weeks deposit inflows...

Source: Bloomberg

On a non-seasonally-adjusted basis, banks also deposit outflows ($59.5BN)...

Source: Bloomberg

Additionally, for the first time in four weeks, money market funds saw (admittedly small) outflows this week (-$6.5BN), taking them just off record highs...

Source: Bloomberg

That is only the second weekly outflow from MM funds in the last three months... and the outflow was all institutional (with retail funds continuing to see inflows)...

Source: Bloomberg

Excluding foreign deposits, the US domestic bank deposit outflows were considerably worse, down $85BN (NSA) and $88BN (SA)...

Source: Bloomberg

That is the biggest weekly SA domestic deposit outflow since the SVB crisis in March 2023...

Source: Bloomberg

As a reminder, its tax-filing extension deadline time, which we're sure explains some of this. However, this is the largest mid-October deposit outflow since at least the GFC.

Outflows from Large Banks (-$81BN SA and -$85BN NSA) dominated small inflow for Small Banks (+$3.4BN SA and +$0.03BN NSA).

The Fed's bank bailout facility continued to shrink last week (down $2BN), really getting back to immediate SVB crisis loan levels (having erased all the arbitrage-driven surge in the blue box)...

Source: Bloomberg

As might be expected with the large deposit drawdown, loan volumes shrank dramatically at Large Banks (and rose modestly at Small Banks)

Source: Bloomberg

Finally, the gap between bank reserves at The Fed and US equity mareket cap continues to widen...

...will that relationship ever recouple?

So, all eyes next week on deposit flows to see if they normalize after tax-day.