Liquidity Dynamics: ESA Balances
- Tax payments and repayment of TFF have seen funds debited out of ES balances last week.
- ESA balances are at $396Billion, the lowest since March 2023.
- Over the next 5 weeks we will see ESA balances fall by a further $46Billion.
- This draining of funds may add to tighter financial conditions and added strain in liquidity.
- Liquidity has certainly returned to the market since last quarter however this lowering of ESA balances is something to consider going forward.
U.S. Job Openings A Step In The Right Direction
- Job openings in the US decreased by 338,000 to 8.827 million in July 2023.
- This was the lowest level since March 2021 and below the expected 9.465 million.
- The decline marked the third consecutive month of reduced job openings.
- This suggests a gradual slowdown in the labor market due to the Federal Reserve’s tight monetary policy.
- The quits rate, has fallen back to pre pandemic levels of 2.3%. This may reflect workers holding onto jobs as they believe it is not as easy to find another one.
- This cooling of the labour market is a step in the right direction for the Fed in their battle against inflation.