If the last 3 months have mainly been about circa $700bn being injected into banks and $500bn being pulled from bank deposits and some of that deposit pull going into various financial markets, the coming summer period looks set to be more or less the opposite.
Consider the following:
- Yellen will raise up to $1tn TGA and is issuing net about $250bn/ qtr.
- Powell is doing about $300bn QT/ qtr
- And he wants to run off the funding expansion this year, they have run off $200bn SOFR based funding MTD
- And have another $400bn SOFR based funding YTD to go
- There is about $3.3tn excess reserves at the Fed