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.