With the fourth quarter nearly ended, banks look poised to report yet another period of strong deposit inflows.
Weekly money supply data is volatile, but if amounts reported for the end of November held through the final month of the year, transaction balances would post their fastest quarterly growth rate in a year and a half (see charts below).
That would follow big additions to transaction accounts by both households and nonfinancial corporations in the third quarter, when the two sectors increased such balances at a $211 billion, seasonally adjusted annual pace, according to Federal Reserve data.
Savings deposits also grew briskly in the fourth quarter, through November, and time deposits in accounts with balances of less than $100,000 have continued to run off as banks keep pivoting to cheaper funding.
Overall, cash remained at
Expectations have continued to build that corporations will decisively shift footing in a turn toward expansion and acquisitions. But though inventories and investment in equipment and software have been growing, corporate holdings of deposits and money market fund shares jumped 37 basis points from the second quarter, as a portion of total assets, to 5.93% in the third quarter, a 50-year high.
Among households, cash positions also remained elevated, though they ticked down 14 basis points as a portion of assets, to 11.13%, as a jump in the value of stock portfolios outpaced deposit growth.
[IMGCAP(1)]
