Good news:
Reserve credit dropped by $108bn to $2,040bn, the total drop since december 17th is around $250bn.
The most recent drop is due to lower TAF and extended discount window borrowings and a cut in currency swaps outstanding.
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- TBAC Minutes: Sovereign CDS and Swap Spreads
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The end-of-year effect is behind us, so that’s a factor, the drop is TAF and discount window.
The question is whether this will persist, not clear the Fed is going to buy up to $500bn of MBS so probably temporary improvement.
how do you interpret this data?
are banks under less pressure and interbank lending started again?
or is it just a sign of deleveraging, banks scaling back new loans?