Fed Discount Window Weekly Update

This week’s Primary Credit activity at the Fed’s Discount Window:

• This week’s primary credit balance was $6.4 billion, down from $7.0 billion a week ago.

• We expect the primary credit balance to increase over the course of 2024 so long as short rates remain elevated and the yield curve remains inverted. An inverted yield curve makes it difficult for banks to run a profitable loan book given elevated short term savings rates.

• This autumn Janet Yellen will be required to fund the fiscal deficit with new Treasury debt. Those auctions will influence the 10-year yield. Treasury has a 10-year auction that will take place on July 10th that will be interesting to observe in terms of the interest level from private investors as well as sovereign funds.

Federal Reserve Balance Sheet: Factors Affecting Reserve Balances - H.4.1: https://www.federalreserve.gov/releases/h41/current/

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