Global dollar demand is evident.

Last Sunday, I suggested the Fed’s dollar swap announcement+, made in conjunction with the parties to the standing arrangements, betrayed central bank concerns about dollar-funding stress amid a flurry of panicked efforts to extinguish fires in the banking sector.

Although swap line utilization looked tame, the “dash for dollars” (if you like) showed up in the first large FIMA draw since the facility was established and the second-largest liquidation of Treasurys by the foreign official sector on record.

The drop in the custody holdings series dwarfed any single-week decline seen during the original COVID panic, although the cumulative sum over six straight weeks of liquidation from March through early April of 2020 was $161 billion.

I’m not sure it’s as straightforward as adding the $76 billion Treasury liquidation to the $60 billion in dollar liquidity accessed through FIMA repos+, but if you wanted to goal-seek the biggest number possible, you could tally those up with the near $11 billion drop in custody holdings from the prior week, then round up and call it $150 billion in foreign dollar needs.

“Needs” may be too suggestive, though. There’s no real evidence of panic across the constellation of indicators that’d be flashing red if the system were on the brink of seizing up in earnest. It’s never a bad idea to have dollars on hand when trouble might be brewing — you know, “just in case.”

I assume this is primarily (and maybe entirely) developed market dollar demand. There’s been no EM paroxysm over the past two weeks.

As for the FIMA usage specifically, it’d be some coincidence if the first big draw on the facility happened during a week when a bleeding SIFI (Credit Suisse) tapped its central bank (the SNB) for what some reporting now suggests was ~$200 billion in liquidity, and the two events weren’t related.

Whatever the case, the “dash for dollars [has] gone global,” as Goldman put it late Friday.