Weekly Update: Bank Term Funding Program

Look for Discount window borrowing to ramp up in mid-March as the BTFP expires. We believe the Fed’s Discount window propaganda (“no stigma here”), will be coupled with Fed Funds rate cuts.

• The Bank Term Funding Program (BTFP, bail out/QE) had approximately $165.2 billion in outstanding loans as of Wednesday this week, down from $167.8 billion a week ago as the Fed increased the borrowing rate to banks ahead of the BTFP’s scheduled expiration on March 11th, 2024. I would expect the Fed’s Discount window loan balance to move materially higher from today’s position, which is $3.2 billion, up from $2.8 billion a week ago.

FEDERAL RESERVE statistical release: https://www.federalreserve.gov/releases/h41/current/

---