Rashad Ahmed draws my attention to the following:
Source: Ahmed via FRED.
“The H.8 data is updated to March 15 and the data pretty clearly shows the ‘race’ on the small black banks. “Other deposits” mainly represent liquid demand deposits (total deposits minus large term deposits). “Borrowing” proxies for banks drawing credit from FHLB and the Fed.
Not only are the funds changing location, they are leaving the repositories, as Torsten Slok pointed out at Apollo today.
“The divergence between the federal funds rate and current account interest rates is the fundamental reason money is being moved from bank deposits to higher yielding investments, including money market accounts, see the graphs below. Higher rates as a source of instability for Treasury deposits and holdings is highly unusual compared to previous banking crises, where the source of instability was usually credit losses putting downward pressure on the side illiquidity of bank balance sheets.