Money market funds saw the largest weekly exodus since Lehman in the week to October 18, data released on Thursday afternoon in the US showed.
The $98.8 billion outflow came amid cash withdrawals presumably tied to tax payments around an extended filing deadline.
The entirety of the redemptions (and then some) were in institutional government. That category shed $112.42 billion during the week.
This is anomalous and therefore it makes little sense to contextualize it via this year’s massive inflows to money funds.
I love a “since Lehman” headline as much as anybody, but I don’t think there’s anything to see here. The IRS granted several automatic extensions this year tied to severe weather, and there was a deadline on October 16. The only color I saw on Thursday evening cited companies making delayed tax payments.
Elsewhere, RRP balances are down to $1.114 trillion now. That’s a $1.045 trillion decline from pre-debt ceiling deal levels.
The local low was on Tuesday, when “just” $1.082 trillion was parked in the Fed garage.
That continues to suggest RRP transformation is facilitating Treasury’s T-bill tsunami. Generally speaking, demand for bills seems steady. Thursday’s four-week sale looked particularly strong, although it was hard to get a clean read given a wall of GSE cash at the front-end looking for a home. The four-week sale was probably just as good a place as any. In addition, some folks are likely running screaming away from Treasurys given recent volatility. They too might’ve decided to wait out the storm in four-week cash.
Meanwhile, borrowing from the Fed’s Bank Term Funding Program (which, don’t kid yourself, is now part of the infrastructure) was virtually unchanged over the week at $108.818 billion. Discount window borrowing moved up near $3 billion.
