Rashad Ahmed attracts my consideration to the next factors:
Supply: Ahmed through FRED.
“The H.8 knowledge is up to date to March 15 and the information fairly clearly reveals the ‘race’ on the small black banks. “Different deposits” primarily characterize liquid demand deposits (complete deposits minus giant time period deposits). “Borrowing” proxies for banks drawing credit score from FHLB and the Fed.
Not solely are the funds altering location, they’re leaving the repositories, as Torsten Slok identified at Apollo right this moment.
“The divergence between the federal funds charge and present account rates of interest is the basic motive cash is being moved from financial institution deposits to greater yielding investments, together with cash market accounts, see the graphs beneath. Increased charges as a supply of instability for deposits and Treasury holdings are extremely uncommon in comparison with earlier banking crises, the place the supply of instability was often credit score losses placing downward stress on the aspect illiquidity of financial institution stability sheets.