Market watchers are keen to probe the size of the additional money that will eventually be injected into the financial system through the Federal Reserve’s newly launched Bank Term Funding Program (BTFP). I’m watching. Analysts at JPMorgan Chase & Co. estimate it could provide up to $2 trillion in liquidity.
JPMorgan’s estimate is based on deposits at six U.S. banks with the highest percentage of uninsured deposits in the U.S., with the actual figure at around $460 billion, analysts said. is expected. That amount is huge compared to how far the discount window, another Fed facility, has been used.
The Fed plans to disclose the amount of BTFP used in the balance sheet information it releases every Thursday around 4:30 pm.
“BTFP usage is likely to be at scale,” JP Morgan strategists led by Nikolaos Panigiritzoglu said in a note to clients on the 15th. It is unlikely that the big banks will use it, but it is expected to use up to close to $2 trillion, which is about the same as the total amount of bonds held by U.S. banks other than the five largest banks.
BTFP was established this month following the bankruptcy of three US banks, including Silicon Valley Bank (SVB).
Given that the U.S. is raising interest rates and the opposite is happening with a large supply of funds, the USD’s upside is likely to be limited going forward.
In the short term, it will repeat ups and downs, but we assume that USD selling will increase in the medium to long term.