J.P.Morgan Weigh In On Latest Fed H.4.1 & Weekly Money Market Fund Flows

J.P.Morgan note that “the Fed’s H.4.1 report released this afternoon showed that borrowing at the BTFP rose by $10.7bn to $64.4bn, while discount window borrowing decreased by $22.1bn, leaving aggregate borrowing from these Fed facilities $11.4bn lower on the week at $152.6bn. In addition, FHLB issuance activity was slightly negative in the week through yesterday. This, and the fact that Fed funds volumes remained range-bound between $92-$98bn during this same period, well above the low of $41bn on March 13, suggests that FHLB advance borrowing has been non-existent. Taken together, it appears that deposit outflows have likely slowed further, and that the sharp increase in borrowings earlier this month was largely precautionary in nature. Perhaps this is not surprising-the Fed’s H.8 report released last Friday showed that domestic banks, in aggregate, increased cash balances by $456bn in the week through March 15.”

• “Additionally, inflows into Government and Treasury MMFs have decelerated, totalling $73bn in the week through yesterday, roughly half of the $134bn of inflows posted in the previous week, and $143bn the week prior. Moreover, we think at least some portion of the inflows into Government MMFs may reflect seasonal flows ahead of the individual income tax filing date in mid-April, rather than outflows from regional bank deposits. In the last 7 years (excluding 2020 and 2021 when the tax filing date was delayed), government MMFs recorded $25bn of cumulative inflows between two and four weeks prior to the tax deadline on average.”